Rome

Parties lobby Monti to rewrite budget

Govt says bottom line must not change

Parties lobby Monti to rewrite budget

Rome, October 24 - Premier Mario Monti is coming under pressure to rewrite the budget measures contained in the government's so-called Stability Law in opposing directions from the parties supporting his emergency administration. Pier Luigi Bersani, the leader of the centre-left Democratic Party, said his MPs would veto education cuts featured in the package. "Schools have already been hit; we have to stop to reason on how to achieve a well-made reform," Bersani said after meeting Monti for talks on Wednesday. Bersani recently said he feared the cuts would cost the jobs of over 6,000 Italian school teachers. Silvio Berlusconi, who said Wednesday he would not run for a fourth term as premier in elections next year, reiterated that he was unhappy about a 1% increase in value added tax and a retroactive reduction in tax deductions for the current tax year during a meeting with Monti late on Tuesday. Ex-premier Berlusconi's centre-right People of Freedom (PdL) party is the biggest group in parliament and therefore its support is crucial for Monti's emergency administration to be able to get the package approved. The party is planning to publicly campaign for these unpopular parts of the package to be amended, ahead of general elections next spring. Monti is said to have defended the bill, which also features reductions in income tax in the two lowest bands and a series of cuts that will hit sectors including health and eduction. The government has said it is willing to accept some amendments to the Stability Law during its passage through parliament as long as the bottom line is not affected. "There is dialogue (with the parties)," said Economy Minister Vittorio Grilli. "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". The premier has stressed though that the measures do not amount to another austerity package like the tax hikes and spending cuts his government passed last year to put Italy on course to balancing its budget in structural terms next year and take the country out of the centre of the eurozone crisis. Grilli said on Wednesday that attaining the government's target of balancing the national budget by next year was "a difficult feat, but possible".

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