World Bulletin / News Desk
Italy's government unexpectedly cut income tax rates for the country's lowest earners while promising to stick to the budget goals it has agreed with the European Union.
After an eight-hour cabinet meeting that ended early on Wednesday, the government said it would also halve a planned increase in sales tax rates to a single percentage point.
Italy holds parliamentary elections in about six months.
"Today we can see that budget discipline pays and makes sense" because "we can allow ourselves some moderate relief," Prime Minister Mario Monti told reporters after the meeting.
The severe austerity imposed by Monti since he took over an unelected government in November has exacerbated a year-long recession in the euro zone's third-biggest economy and been a focus of criticism by all political factions.
He increased taxes and cut pensions to put the public accounts on track and head off a Greek-style debt disaster.
Monti has repeatedly denied he would stand in the election but did say he would serve his country again if asked following the vote.
Italy will reduce by a percentage point the two lowest income tax rates.
The rate will drop to 22 percent from 23 percent for those earning less than 15,000 euros per year, and to 26 percent from 27 percent for salaries between 15,001 and 28,000 euros. The top three rates will remain unchanged.
Italy will balance its budget in structural terms next year, as it has pledged its EU partners it would do, according to a statement from the cabinet meeting.
A second round of cuts to health care spending and other state expenditure, a new tax on financial transactions and "fiscal interventions" for banks and insurance companies will help pay for the measures, according to a statement.
The savings should amount to 3.5 billion per year when at full regime, the government said. Savings from a previous round of spending cuts will total 4.4 billion euros this year, and 10.3 billion euros next year.
Also decided during the cabinet meeting was a reform to the constitution to centralise spending controls over the country's 20 regional governments, which have been the focus of a recent series of high-profile corruption scandals.
That will involve reforms designed to regain coordination of spending on energy, tax collection, and the national transportation network.
Also to address corruption, the position of anti-corruption commissioner, who will be given investigative powers, will be created with the passage of the budget.
Depreciation of emerging market currencies, combined with low commodities prices, have made investors around the globe nervous
Global growth at further risk from Chinese asset price deflation, and US interest rate increases, Moody's says
Traders fear Chinese government will withdraw support measures markets
European Commission president 'convinced' three-year plan will boost investment in EU
Deal aims to bolster fight against tax fraud through exchange of financial information on Turks holding accounts in US and vice versa
Vessels were delivered to port of Alexandria on June 17
The economic cost of violence according to the 2015 Global Peace Index has reached a staggering $14.3 trillion with Syria the least peaceful country.
The leading opposition lawmaker has said that Turkish President Erdogan is open to all possiblities for a coalition.
Qatar has filed a lawsuit against the leader of the National Front in France for his comments regarding "terror" activities.
Saudi Arabia will put in place an electronic bracelet system for all pilgrims visiting the country to perform their Hajj duties.
After U.S. Federal Reserve Chair Janet Yellen indicated that the central bank was poised to raise interest rates, European stock markets fall.
Italian company Enel will invest 18 billion euro for renewable energy sources in Africa.
Azerbaijani president said in a statement that Southern Gas Corridor project will supply neighboring and European countries for a 100 years
Oil prices rose above $60 due to Iran's call for oil production cut
Economic growth in the Euro-Zone is not at desired levels.
Director and Global Head of Islamic Finance at Standard & Poor's says that growing market for sukuk and new players mark 'significant interest' in Islamic finance.