When Italian Treasury Minister Mr Vincenzo Visco unveiled his government's budget plans in late September, opposition critics immediately cried foul, arguing that a 41,483 billion lira (€21.1 billion) package of tax cuts was nothing less than a cheap pre-electoral gambit. With a general election due next spring, such a outcry was only to be expected. Mr Visco, however, defended his budget by arguing that the tax cuts were merely the "logical result" of the fiscal rigour that has marked the current centre-left government. Certainly, after four years of "austerity", such a budget comes as welcome relief to the Italian taxpayer, who has been squeezed hard as Italy worked belatedly and overtime to bring its economy in line with the infamous convergency criteria for the start-up of the euro.
Even though Italy's Finance Bill (Budget) is currently being debated in parliament, its overall outlines are clear: 13,165 billion lire (€6.7 billion) worth of concessions via tax breaks and fuel tax cuts have already been conceded to (mainly) PAYE workers by ministerial decree, taking effect as and of the end of this month.
A further 28,318 billion lire (€14.4 billion) worth of concessions, including income tax cuts, pensions benefits and measures such as the abolition of state tax on first homes, have been written into the provisions for 2001. Those same measures forecast a 1.3 per cent budget deficit this year and 0.8 per cent deficit next year.