Sunday, 6 June 2010

Plunging Hands into the Wrong Pockets


(shion kim, controsensi)

[Edoardo Montenegro, Turin] - The Italian deficit-cutting package punishes young people and does not support growth.

Pressed by the financial markets, which are actually looking at Italy as a new target for speculation (1), the Italian Government presented a budget bill accounting for € 25 billions from 2011 to 2012. Transfers to local administrations will be cut by € 8.5 billions, while € 8 billions should be regained by contrasting tax evasion.

As outlined by Tito Boeri and Massimo Bordignon, young generations will bear the heavier burden: recruitments and careers will be blocked in the public sector and structural reforms will be postponed. Besides, school and healthcare will be put under pressure, while the announced cuts on the costs of politics are almost non-existent (2).

Mario Draghi, the governor of the Bank of Italy, recently recalled the urgency of structural reforms the country needs to reestablish economic growth: "The fall in GDP increases the burden of financing the public administration; the costs imposed by tax evasion and corruption become even more unsustainable; stagnation destroys human capital, especially among the young" (3).

The financial crisis should actually be a great opportunity to boost competitiveness and reduce the waste of public money. Antonio Di Pietro, leader of Italy of Values, presented an alternative budget bill accounting for € 33.5 billions, consisting mainly in cuts to the costs of politics (€ 24.75 billions) and including measures to sustain private expenditure as well as Small and Medium Enterprises (4).

Having demagogically abolished ICI  - the main local tax - in 2008 (5), Silvio Berlusconi is now bringing local finance to disaster with an € 8.5 billions cut. Moreover, his undeniable and repeated appeals for tax evasion (6) make his government unreliable on this subject.

How can a government be fair with its citizens if tax dodgers are amongst its main supporters?

__________

(1) Richard Barley, "Italy looks like next target in euro zone", online.wsj.com, June 3rd 2010.

(2) Tito Boeri and Massimo Bordignon, "I veri numeri della manovra", lavoce.info, June 1st 2010.

(3) You can read the Concluding Remarks of the governor of the Bank of Italy at the Ordinary Meeting of Shareholders, held in Rome on May 31th 2010, at bancaditalia.it.

(4) Antonio Di Pietro, "Package on the economy: the alternative", antoniodipietro.it, June 1st 2010.

(5) "Sì a pacchetto sicurezza e taglio ICI", corriere.it, May 21st 2008.

(6) Massimo Giannini, "Evasione, processi e condoni. La 'favola' del Cavaliere", repubblica.it, June 3rd 2010.

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