Italy's budget

Monti's measures are laughable. Some of them are even wrong: the Constitution doesn't provide for the retrospective of a law (the s.c.tax-shield with its 5%). Monti wants the people who brought back their capitals paying 5% accorging to the law now to pay 1,50% more. This Monti is an ignorant person....as every economist who are all stargazers and nothing else.

With a large-scale tax evasion, Italian GDP figures are inaccurate:

If an enterprise registers growth, then that extra earning will be taxed to the hilt.

Thus, the extra earning is hidden to evade tax, consequence is that Italian GDP growth appears tiny in the good times, and drops when all other nations' GDP falls.

Cash trading and off-shore invoicing fuel tax evasion.

Berlusconi dropped cash trading controls in 2008.

Berlusconi is on trial for tax evasion by off-shore invoicing.

Military spending by Italy is conditioned by its NATO commitment - if you are in NATO you are in, if you are out of NATO then you are a potential enemy.

The apparent thievery at Finmeccanica, or 'Why Not', shows that those on huge State salaries, and those with the 'Eminent' connections, are as prone to crooked practice as any of Italy's small-time and big-time gangsters.

Clandestine organised crime syndicates exist and operate globally, not only in the south of Italy.

Only fools or the naive believe that Italian crime sydicates do not operate in the north of the country.

Strange for a country that is in such desperate need for income that it chooses to give tax exemptions to business enterprises run by the Vatican State, making non-Vatican enterprises uncompetitive.

Also, the Italian State has chosen to gift radio frequency concessions instead of auctioning them to the highest bidder.

A move that favours the current players like Berlusconi's Mediaset. As a result SkyItalia has withdrawn from the process.

It will take time to steer the good ship Italia back on course.

But the pirate, by means of the Senate, still has control of the rudder.

I think Italy needs these measures, even if they affect too much on the poor and the middle class, but I don't think this is matter of the new technical government. This is the fault of the rich managing class present in the Italian Parliament. And unfortunately, if this is the price to pay to save Italy we have to do it.

Too much stick and not enough carrots!
Economists and commentators are right in decrying the heavy reliance on tax. Taxes when too high
can only bring about recession.
A better job could also have been made with pensions. As mentioned in the article, the pension shake-up
will not bring immediate benefits.
One cannot fail to be deluded by Monti's lack of imagination. Italy needs money to refinance its debt
fast, it needs to shift its debt burden from international lenders to national savers.
Italy has lower debt level than Japan, but is more exposed to the the whims of foreigners. This
needs to change.
A simple scheme which could achieve this would be to trade, lower pensions benefits for pensioners
for higher overall remuneration.
1) Pensioner only non-taxable 10 year bonds BTP (Buoni del Tesoro per le Pensioni) offering an incredible 12% interest rate and transferable to heirs without any tax if the pensioner dies while in possession of the bonds.
The heirs would continue to benefit from the tax-free interest and 12% rate.
2) To subscribe this scheme, a pensioner must forfeit an amount of his current pension in the first
years in which he joins the scheme which is compensated by a factor of two by the interest rates from
the bonds. To compensate for inflation, the pension amount forfeited tends to zero towards the end of the
10 year term.

The offer it too good to miss out. In the first years it would in effect cost the Italian government
only 6%; the current market rate for Italian debt. It would also increase the spending power of pensioners.
Similar but less advantageous schemes have been used before by Italian governments.

The result of the move would be to bring Italy's position closer to that of Japan. Of course government expenses will have to be better managed, wasteful projects avoided, tax evasion reduced and labor reforms
carried out.

I am sure that Economist readers can make more and better suggestions on how the Italian debt crisis can be solved than the ones that have been made so far.

Fornero's tears = She shed only crocodile tears. Very moving! Ah,Ah,Ah!!!

You cannot simply tax your way to fiscal sanity. Governments and their constituents must face up to what all the money is being spent for. They must answer the question whether the country really needs much less can afford over half the wealth produced in Italy or any society being dispensed by vote seeking politicians.

Now get the Berluscronies to pay their share of the taxes, and Italy will be just fine.

...Nor did it raise the top rate of income tax. But that was because of pressure from Mr Berlusconi’s party".

That's once again meaningful. I also feel suspicious toward Di Pietro's continuous critical attitude to everything. Although I am still convinced that the current government shall stay in office just to comply with the own scheduled agenda issues, I agree with Mr Di Pietro arguing that "military spending" shall be further cut from the budget. I wish to be clear: I am not any pacifist. Saying "military spending" we may mean, though improperly, a lot of money governments have always poured at the military's benefit, just for their amusing and amazing recreation parties at which everybody may be invited just as being an official's friend, relative or any well-esteemed or beloved person. Other money waste, really useless and harmful in the present time, armed forces members have been getting advantage from on their own, which are not on the real defence and public order purpose, shall be cut as well. The military, however, is not the only waste hole in the public establishment a great deal of spending for shall be cut.
I hope this real aspect may be going to be considered soon and soon solved.

Mr. Monti sounds like a man who knows what he is doing. In harsh economic and political situations, it only makes sense that cuts will be made in areas that come close to the voters. The package is far from perfect, but the situation is far from stable. Cuts that provide security are where Italy needs to focus.

Monti, this seems strange to me.

pension reform is urgent when debt is huge and you have a rapidly aging population. what is needed is to get rid of of the "pay go" system and introduce one based on individual accounts.

Taking money from the ritired people and giving it to the banks without any kind of cuts and savings in the public administration - IT'S A SHAME. This government has not been even elected democraticaly.

NO FOR EUROPE OF BANKS!

For the few who care, an update on provinces.

The law states that Regions must reassing powers to Regions or municipalities by April 2012, or else Parliament will kick in (e.g., if the marten does not guard the chickens well, the fox will be called in). If this is done, accordingly to plan, the effects of the new law, experts say, will kick in in November 2012 as the new regulations should prompt provincial administrators to resign.

This gives politians (they have started already) at least three distinct ways to block the law, and enormous time to lobby.

And, yes, the banks, who got their minister in Mr Passera, the former head of Banca Intesa, who of course has no conflict of interest, got a great, sweet deal - perhaps much needed, but did we need a top banker as a key minister?

Oh, Monti, Monti.

Only commenting here cos I love the REM title.

IT is never to late to mend...works perfectly with Italy,,,time to put ur foot down n act sencebly than silly

why don't they mention tax evasion which is the biggest problem ? Monti introduced a no cash transaction over a certain amount rule, but I don't think this is enough. In Italy most of small private business declaire minimum, like dentists who declair round 16 000 euro per year but earn way more. The government is burdening already heavily taxed citizens and it is not touching the ones who evade taxes. This is the biggest problem in Italy and I wish the writer of this article mentioned this topic.

Ten Reasons to Support Sicilian Independence:

1) Because an island has no border problems.

2) Because 150 years after the Risorgimento, the Sicilians still do not consider themselves "Italians". Besides, Sicilian should and could easily be upgraded to the status of a full language.

3) Because the war against the Mafia can only be fought by Sicilians, not by the rest of the country against Sicilians.

4) Because currently, Sicily is the "tail that wags the dog" - Italy is governed from Sicily: to no benefit of the Sicilian people at all.

5) Because the talk about the Euro being too "German" or too "over-valued" for Italian competitiveness is rubbish; that argument looks a lot more valid however, if we look at Sicilian exports.

6) Because 5.1 million Sicilians are about the same number as Finns, and are more numerous than the Irish, Slovenians, Estonians, Latvians, Lithuanians, Luxembourgeois, Maltese, Cypriots and soon-to-enter Croatians.

7) Because without Sicilian votes, Berlusconi would never have arrived to government.

8) Because the dictum "For things to remain the same, everything must first change" regards Sicily, not Italy.

9) Because the old saying from Catania - "Without Italy, Sicily is afraid; without Sicily, Italy counts little" - no longer holds in 2011. Some 55 million Italians can get along quite well without Sicily, while Sicilians would still be within the EU and NATO, with protection for its shores from Italian, European and North American sources - and with money from Brussels to further its economic development (quite possibly outside of the Euro).

10) Because the option of retaining Italian citizenship could be easily extended to Sicilians (just as was done after Irish independence in the first half of the 20th century) who would have no official nor unofficial obstacles to coming to the Continent to look for work.

> despite Mr Monti’s promises of fairness, too much is being loaded on to the poor

A good rule of thumb for judging reforms is how they deal with the politically powerful but economically weak (usually: government employees, unions, and protected industry). The economically strong do well out of reforms and the politically weak get screwed either way.

300 billion euros to refinance in the next year sounds like a lot - I hope the Italian people realize that serious reforms will be less painful than the alternative.

At 4% of gdp, the italian deficit is lower than most. Contracting it by 2% per year, two years in a row when gdp is decreasing is needless, self-inflicted suffering.
Fine, you don't reason with panicky investors. But it is quite worrying that the only way to placate them is to shoot one's own foot, by balancing an already reasonable budget during a recession.

Until and unless Signor Monti is serious about eliminating the "underground economy" of Italy, none of this will work. The same applies to Greece, for that matter. No reform will work until and unless the Underground Economy is either destroyed or forced to come above ground at the minimum.