Austerity measures: the measure of Monti's Government

Mario Monti’s austerity budget measures will go through Parliament quickly.

Parliamentary support is still strong but Mr Monti has to negotiate a few changes to the original bill. Political parties and unions are asking for changes to the new municipal tax on properties, which is replacing the tax abolished in 2008 by the Berlusconi Government. Other possible amendments may relate to the blocking of indexation for pensions, with a more generous exclusion limit. Major political parties, forming the broad coalition that supports Mario Monti, are aware that any modification has to remain within the set limits of the thirty billion euro bottom-line put together by a Government desperately trying to be perceived as rigorous yet equitable.

The proposed additional tax on capital returned to Italy in 2010, after Berlusconi’s amnesty, may be difficult to achieve and will make it harder for the Government to comply with equity principles given the absence of any other wealth tax.

A petrol increase of 10 cents is one of the immediate results of Monti’s “save Italy decree”. Despite the many drastic changes in the area of social security – accompanied by effective new rules against tax evasion – the Government still enjoys strong favorable public opinion, and support for Mr Monti is at 64%.

The four hour strike decided by unions, parliamentary opposition from the Northern League and social opposition promoted by the left may appear as routine efforts, made to provide an excuse for Italy’s expensive and debt growing life-style.

Even the efforts currently made by individual members of Parliament to modify the bill and be credited with vote-winning results for the next electoral campaign, may prove useless if the Government makes the obvious recourse to a vote of confidence.

A confidence vote that looks increasingly necessary but that can still be avoided if the broad coalition that supports the Government reaches an agreement and starts acting as a solid majority. This could be another sign of good will, in addition to the austerity measures already approved, that Mr Monti could use in Brussels.