Dec. 6 (Bloomberg) -- Italian Prime Minister Mario Monti said the Parliament has little time and little margin to modify his 30 billion-euro ($40 billion) budget package.
“Parliament is sovereign, but time is short and the margin for maneuver is very limited,” Monti said today in an interview on the “Porta a Porta” talk show on state-owned RAI television.
One area where there government might show flexibility would be on how many pensions will be stripped of cost-of-living adjustments. Labor Minister Elsa Fornero said on a separate television program more pensions could be protected from the change if the funds could be recovered by other means.
It is “premature” to decide whether to call a confidence vote, which stakes the government’s survival on the outcome, to speed passage of the package in the legislature, Monti said. The premier presented the measures to the Parliament in Rome yesterday and a vote is due this month.
The package includes an overhaul of the pension system, restoration of a property tax on primary residences, tax breaks for companies hiring women and young people, higher levies on luxury goods and measures to curb tax evasion. Monti said the package will help tame the euro-region’s second-biggest debt and restore investor confidence in Italy. Italy’s 10-year bond yield fell the most in four months yesterday after Monti presented the measures.
“I have asked Italians to accept serious sacrifices,” he said. “But the alternative wasn’t to go ahead without sacrifices. There was the real risk that the state couldn’t be paid for, that salaries and pensions wouldn’t be paid. We don’t have to look very far to see what could have happened. What happened in Greece could have happened here.”
The government will not raise personal income tax, though it will charge 46 percent on severance packages of more than 1 million euros, more than the top tax rate of 43 percent, Monti said.
Monti also plans to create a task force to come up with additional measures to reduce the cost of politics in Italy, a country with Europe’s largest and best paid legislature. There are almost 1,000 lawmakers in the Italian Senate and Chamber of Deputies, almost twice as many as in the U.S., which has a population five times that of Italy’s.
--Editors: Kevin Costelloe, Paul Badertscher
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