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Berlusconi drops tax hike for the rich

Berlusconi drops tax hike for the rich
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Earlier this month he said his “heart bled” at the thought of asking Italians to put their hands in their pockets. Now Silvio Berlusconi has dropped plans for a high-earner levy as he struggles to hold his coalition together and meet European demands for austerity cuts.

At a seven-hour meeting with Northern League chief, Umberto Bossi, the Italian Prime Minister agreed instead to halve the number of MPs, remove a layer of local government and tackle tax evasion.

It is a major shift from the original 45.5-billion-euro savings package put forward by Giulio Tremonti, the increasingly isolated Economy Minister, who was also at the meeting. A possible hike in VAT did not materialise.

Mayors from across the country and the political spectrum had gathered in Milan, where the meeting took place, to express their opposition to cuts to their budgets. They say the State should shoulder more of the burden.

The new proposals also have to be approved by both houses of parliament by mid-September.

It is still unclear whether a planned strike on September 6 will go ahead.