Italy dropped Monday a proposal for a levy on high earners approved by the cabinet earlier this month as part of an austerity package aimed at calming the markets by balancing the budget before 2013. The "solidarity tax" had proved highly controversial within Prime Minister Silvio Berlusconi's centre-right coalition. The government said it would instead step up measures to fight tax evasion in order to raise revenues.
The decision was the result of a meeting between Berlusconi and Umberto Bossi, the leader of the Northern League party and a key coalition partner whose support the 74-year-old prime minister needs to stay in power.
The government emphasised in a statement that the changes to the austerity plan would not alter the overall savings of 45.5 billion euros ($66 billion).
Berlusconi -- a billionaire media tycoon -- had said he was against taxing the rich, which would have gone against a campaign promise not to raise taxes.
The temporary tax would have been five percent on revenues of more than 90,000 euros a year and 10 percent on revenues of more than 150,000 euros.
In response to the demands of the Northern League, the government also agreed to moderate some of its cuts on local government but said it would still do away entirely with provincial administrations -- a form of local authority.
It also said it planned to cut the number of parliamentarians by half.
The latest measures still have to go before parliament for final approval, expected next month, and come on top of a three-year 48-billion-euro austerity package adopted in July which failed to reassure investors over Italy's debt.
Italy has one of the highest debt levels in the world and a low growth rate.
Under pressure from investors and the European Central Bank, the government this month said it planned to restore budget balance by 2013 instead of by 2014 as previously planned.
taken from http://www.breitbart.com/article.php?id=CNG.f17dd620575edb02954a7f8f0971f63b.4c1&show_article=1
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