July 7 2010,
AFP:
Prime Minister Silvio Berlusconi said Wednesday he would make parliament's approval of a 24.9-billion-euro austerity package -- fiercely opposed by Italy's regions -- a vote of confidence.
The government asked for a confidence vote "because this is a fundamental measure for the financial stability of our country," Berlusconi and Finance Minister Giulio Tremonti said in a joint statement.
The decision was immediately criticised by the left-wing opposition: Berlusconi's government has a strong parliamentary majority.
Under the plan, Italy's regions would be expected to shave 8.5 billion euros (10.7 billion dollars) off their budgets: about half of the total public expenditure cuts to be made as part of the package.
The meeting with the heads of the regions on Friday, July 8, 2010
did not result in large compromises:
talian regional governors said they may give their powers back to Rome after what they said was a completely unhelpful meeting with Prime Minister Silvio Berlusconi.
"The outcome was very negative for us," said Vasco Errani, governor of the central region of Emilia Romagna and the head of the regional governors' association, after meeting with Berlusconi and a host of other government officials to discuss reductions in spending.
He said regional administrations may have to "hand back their mandates and responsibilities because these budget cuts don't allow us to carry them out."
Berlusconi and Economy Minister Giulio Tremonti are calling for EUR25 billion in budget savings over the next two years as part of Italy's contribution to fiscal consolidation in the European Union. Around half the savings come from cuts in transfers to Italy's 20 regions, which manage the public health-care system and distribute resources to municipalities for public transportation services and other needs.
....
The government has signaled a willingness to review specific budget measures. Industry Undersecretary Stefano Saglia told Dow Jones Newswires late Thursday, for example, that a measure crimping wind-energy incentives would be scrapped.
But the government insists that the total savings goal must remain intact, so some measures have been hardened. Sergio Dompe, head of Farmindustria, had complained that mandate price cuts and expanded use of generic medicines amounted to a EUR1.2 billion charge on the pharmaceutical industry he represents. But modifications to the measure have only worsened the burden while helping pharmacists, he complained this week.
.... The budget would lower funding for regions by only 3% next year, Tremonti said.
"If regions want to hand back their mandate to supervise disability pensions, that's fine with me," he said Friday, referring to the EUR10 billion in extra annual costs the state has incurred in disability claims since regions were given authority to handle those requests.
But Tremonti has been working behind the scenes to shape a new "fiscal federalism" regime that would give greater financial autonomy to Italy's local governments.
According to a draft of the plan that Tremonti has pledged to finalize and promulgate by the end of the month, Italy's municipalities and regions will by 2012 be able to raise as much as EUR25 billion--or 10% of their current spending--through local income and property taxes. The latter component remains controversial because it runs counter to Berlusconi's main electoral pledge in 2008, which was to scrap an existing tax on home values.
