Italy Cuts Taxes on Lowest Earners

Italy’s prime minister, Mario Monti, surprised low-level earners in Italy with a tax cut in the midst of the country’s austerity program. The government also announced that it was cutting in half a planned increase in sales tax rates to a single percentage point. Despite these less strenuous measures, Monti said that the country would stick to the austerity plan it had agreed to with the European Union.

Reuters reported Wednesday that the decisions were reached after an eight-hour-long meeting of the Italian cabinet that ended in the wee hours of the morning. Previously, everything had gone the other way as the country sought to ward off a Greek-style crisis; taxes were boosted even as pensions were cut and other belt-tightening measures made the recession even worse.

Now, however, the cabinet reversed some of those measures. In the report, Monti was quoted saying, “Today we can see that budget discipline pays and makes sense” because “we can allow ourselves some moderate relief.”