Rome

Govt in rush on measures to boost jobs, cut red tape

Tax breaks to hire young, other incentives for SMEs

Govt in rush on measures to boost jobs, cut red tape

(By Denis Greenan). Rome, June 11 - Italy's new and unprecedented left-right government vowed Tuesday to move quickly on pledges to revive the flatlining economy, tackle record unemployment and cut red tape and taxes that are stifling business. The pledge came amid further evidence of the depth of the country's longest recession for 20 years, with a leading small-business association saying taxes were literally choking them out of existence. Ministers said after a government summit that Premier Enrico Letta's government would pass a decree featuring urgent "to do" measures before the summit of European Union leaders at the end of this month. Relations with Parliament Minister Dario Franceschini said the decree would include "measures for (bureaucracy) simplifications, jobs, taxes and small and medium-sized enterprises (SMEs) to free up energy and resources". There would be a "bonus" for firms who put young people on long-term contracts, he said. Franceschini was speaking after a meeting with the whips of the parties supporting the government, his and Letta's centre-left Democratic Party, ex-premier Silvio Berlusconi's centre-right People of Freedom (PdL) party and former prime minister Mario Monti's Civic Choice party. PdL Lower House Whip and former finance minister Renato Brunetta said tax breaks and lower contributions for new hires were aimed at "recovering the 500,000 jobs lost because of the economic crisis over the last two years". Brunetta and Transport Minister Maurizio Lupi also stressed the importance of averting a 1% rise in VAT scheduled to kick in on July 1, and to fulfill Berlusconi's banner election campaign pledge of scrapping an unpopular property tax called IMU and paying back last year's proceeds. Brunetta rapped Economy Minister Fabrizio Saccomanni for saying money might be too short to do what the PdL wants on both VAT and IMU. Letta has so far only put off June's IMU instalment. Amid continuing PD-PdL bickering over IMU, some pundits have suggested the government may cancel it in name only and reintroduce a property tax called something else sometime in the future, but only for the better-off and people with multiple properties. Labour Minister Enrico Giovannini said the government was determined to send a "strong signal" on youth unemployment, with more than one in four 15-to-24-year-old Italians out of work. A government decree becomes law as soon as it is passed by the cabinet although it has to be ratified by parliament within two months or it stops being valid. The announcement of the decree came as Italy's largest federation of the self-employed, Confartigianato, blasted heavy Italian taxes and an accompanying jungle of rules for choking businesses. Confartigianato head Giorgio Merletti said: "The tax authority in Italy takes 68.3% of businesses' gross margins, while in Switzerland it's barely 30.2%". "Italian enterprises are running blindfolded the wrong way into traffic on a one-way street," Merletti added. "It seems one has to do everything to push beyond limits to find normal conditions for doing business," he said. Merletti warned that businesses can no longer take the fiscal pressure, which in 2013 will reach 44.6% of gross domestic product (GDP), or 2.4% more than the eurozone average. Italians pay 38 billion euros in taxes more than their European partners, or 639 euros more per resident, Merletti continued. Between 2005 and 2013, tax increases sapped 132 billion euros from potential GDP growth, he claimed. "We can't get out of the tunnel of crisis this way," Merletti said. Merletti added that from the beginning of the last legislature to today, the Italian parliament has passed 491 new laws pertaining to taxes, or 100 per year, each accompanied with a kit of implementation decrees and explanatory circulars. Merlett said bureaucracy alone costs Italy 31 billion euros per year, and is particularly difficult for small business people to cope with. Those who lead Italy "don't understand that artisanal products and small businesses are the heart, hands and intelligence of products made in Italy," Merletti said. The Letta government also aims to help the economy by breaking parliamentary logjams and facilitating policy-making. On Tuesday it said a much-trumpeted bill to set out the procedures for reforming the Constitution to streamline government will complete its first reading in parliament by the end of July. "There is a commitment to lay out the process for reform," Franceschini said after the government summit. Letta's government has set an 18-month deadline for the reforms, which will be framed by a panel of 40 parliamentarians helped by 35 Constitutional experts. Reforms will include a new electoral law, cutting the number of MPs and stripping the Senate of its equal status to the House. Law-making is slower in Italy than other countries because the Senate has the same powers as the House. Another mooted reform is to change the way the Italian president is elected. Currently he is voted in by parliament. There is a groundswell on the right for changing this to let the Italian people choose him, as in France and the United States, but this is opposed by many on the left. Any changes to the Constitution require a two-thirds majority in both chambers. If they do not get this, they are subject to a popular referendum, which can abrogate the reform.

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