Rome

Govt flexible over budget, but bottom line can't change

Grilli says administration is lowering taxes

Govt flexible over budget, but bottom line can't change

(see related stories) Rome, October 24 - The government is willing to consider changes to the budget measures in its so-called Stability Law, but there is no flexibility about the bill's overall bottom line, Vittorio Grilli said on Wednesday. Premier Mario Monti faces a possible rebellion from the parties that support his emergency technocrat administration over various parts of the bill. Ex-premier Silvio Berlusconi's People of Freedom party, the biggest group in parliament, is unhappy about a 1% increase in value added tax and a retroactive reduction in tax deductions for the current tax year. Pier Luigi Bersani, the leader of the centre-left Democratic Party, has said his MPs would not vote for education cuts that feature in the package. "There is dialogue," said Grilli, with Monti poised to meet Bersani later on Wednesday after having talks with Berlusconi on Tuesday and the leader of the centrist UDC, Pier Ferdinando Casini, on Monday. "We'll keep it up. There is room for other types of combinations (of measures) but only if the overall figures remain unchanged". Grilli stressed that the 1% increase in VAT was half the hike that had previously been scheduled to come into force next year. He also pointed out that the government was trying to inject some energy into the recession-hit Italian economy by cutting income tax in the two lowest bands in the Stability Law. "We are lowering taxes, not consumer spending, which we want to increase," said Grilli. "It would be good if people started to say that we have reduced VAT by 1% (from the planned increase) and cut income tax".

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