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Europe

Italian senate to vote on austerity package

Text by News Wires

Latest update : 2011-09-06

Italy's senate is set to vote Wednesday on a raft of austerity measures designed to help stabilise the country's finances. Tens of thousands of people took to the streets to protest against the package.

AFP - The Italian government moved Tuesday to placate jittery markets by tightening measures in its latest austerity package and seeking a quick vote on the measures, as well as on a balanced budget amendment.

A cabinet meeting authorised calling a confidence vote on the 45.5-billion-euro ($63.8-billion) austerity package, allowing to Senate to vote Wednesday on the measures that should help stabilise the finances of the debt-laden eurozone country.

The government said "the seriousness of the international financial crisis" justified the rushed adoption of the measures, against which unions held a general strike on Tuesday.

Tens of thousands of workers took to the streets across Italy, shutting down parts of the public transportation system and major tourist attractions such as the Colosseum in Rome.

The final adoption of the austerity package had initially been set for mid-September.

However, the government has been forced to accelerate its adoption and backtrack on changes to its provisions that had damaged its credibility among investors.

After Prime Minister Silvio Berlusconi met with leaders of his ruling coalition on Tuesday they announced the package would again include a wealth tax and pension reforms and raise the VAT sales tax.

The government also said it would endorse on Thursday balanced budget amendments as part of efforts to regain the confidence of markets.

A wealth tax of 3.0 percent on revenues above 500,000 euros ($700,000) was put back into the package on Tuesday, after a tax of 5% had been cut last week under pressure by Berlusconi.

The VAT sales tax will go up one point to 21 percent, according to a statement issued after the ruling coalition meeting.

The retirement age for women in the private sector, now at 60, is to rise to 65 years as it is for men beginning in 2014, instead of 2016 as had been planned previously.

The measures should help Italy bring its budget back into balance in 2013 instead of 2014.

The August austerity package was announced as investors fled Italy's bonds, forcing the country's borrowing costs to unsustainable rates. The European Central Bank undertook a major intervention on secondary bond markets to reduce the tension that had also seen Spanish borrowing rates soar.

Italy, which has debt of 120 percent of its national output, had also adopted a 48 billion euro austerity plan in July.

Date created : 2011-09-06

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