Berlusconi’s ally says next Italian govt. must cut taxes

PanARMENIAN.Net - The next Italian government must cut taxes and shun German-inspired austerity policies which have dragged the country into recession, the main economics spokesman in Silvio Berlusconi's center-right party said, according to Reuters.

Renato Brunetta, an economics professor and former minister of public administration, said a center-right government should rely on steps such as structural reforms and privatizations to tackle Italy's debt mountain.

Brunetta has been one of the leading critics of Prime Minister Mario Monti in the People of Freedom (PDL) party and a chief influence behind Berlusconi's attacks on his "Germano-centric" technocrat government.

"Putting our heads down and carrying on like this with a blood, sweat and tears economic policy designed by (German Chancellor) Angela Merkel doesn't help anyone," he told Reuters. "It's time to finish with it, it's a failed policy."

Brunetta said Monti, appointed last year to stem a widening financial crisis, had essentially continued the tight budget policies already followed by Berlusconi's last government, which passed two emergency budgets worth a total 60 billion euros.

But he said Monti, who added a further 20 billion euros of tax hikes and spending cuts, had made three big mistakes which had deepened a recession expected to see the economy shrink by 2.4 percent this year.

The first was extending the so-called IMU property tax to cover principal residences, a deeply hated measure in a country where more than 80 percent of people live in homes they own.

In addition, he said Monti had botched a pension reform which put back the retirement age but left thousands of early retirees with neither a job nor pension.

Finally, Brunetta said complex labor reform designed to ease hiring and firing rules had satisfied no one and added complications that made it harder for companies to hire new staff or to lay workers off.

"Monti did all this because he was forced to by German policies and in doing so, he delivered a hammer blow to the economy," he said.

Berlusconi currently trails in the opinion polls but whatever happens in the election, Brunetta said the center-right would not permit a repeat of Monti's technocrat government, which depended on the support of both main parties.