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Italy Trims Austerity Plans, Removes Tax Hike Proposal On High Earners, To Pursue Tax Cheats Instead

Tyler Durden's picture




 

Italy's brief flirt with Austerity, disclosed on August 12, lasted all of 2 weeks. As Reuters reports, following a 7 hour meeting between FinMin Tremonti who has been portrayed by the media as the primary reason why Italy has recently become the target of bond vigilantes, and which in turn was forced to establish some token measures of austerity, and PM Berlusconi, the most provocative measure of the "austerity" packet have been dropped, namely the solidarity tax, which would see new taxes on high earners, as well as austerity imposed on local budgets, and instead will be replaced with new 'tax evasion' avoidance schemes. Surely this massive watering down of Italian austerity will work: just ask Greece how effective the whole crack down on tax avoidance was. At least the Piazza Navona strike cam can be dropped for now... or at least until bond vigilantes strike in Rome again, and the country does the whole austerity charade again. 

From Reuters:

The Italian government will drop a proposed tax on high earners from an austerity package going through parliament and replace it with other measures, Prime Minister Silvio Berlusconi's office said on Monday.

 

A statement issued after a meeting between Berlusconi and senior ministers from his coalition government made no mention of any increase in Value Added Tax, which had been widely mooted in the media.

 

The so-called "solidarity tax" on incomes above 90,000 euros will be replaced by new tax measures to combat tax evasion and by reduction in tax breaks for cooperatives, the statement said.

 

But it was vague on the details.

The bolded sentence says it all.

And some more from Bloomberg:

Prime Minister Silvio Berlusconi’s government has dropped a planned bonus tax on Italians earning more than 90,000 euros a year from a package of austerity measures that aims to balance the budget in 2013.

 

The levy will be replaced with other measuures that aim to target tax evaders, Berlusconi’s office said in an e-mailed statement. The decision came after Berlusconi and Finance Minister Giulio Tremonti met with Northern League leader Umberto Bossi, a key coalition ally that opposed some of the key aspects of the austerity plan passed by Berlusconi’s Cabinet on Aug. 12.

 

As a result of today’s agreement, the plan will also be modified to reduce the cuts in transfers to regional and local governments. The note did not give details of how the government would compensate for the lost deficit reduction from today’s changes.

Bottom line: just like our own debt ceiling expansion austerity plan, nobody really has any idea what will be cut... suffice to say, it will be cut. Or some such.

 

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Mon, 08/29/2011 - 13:42 | 1612195 traditionalfunds
traditionalfunds's picture

high earners = tax cheats

 

same difference no?

Mon, 08/29/2011 - 14:08 | 1612294 tmosley
tmosley's picture

Next up:  all earners=tax cheats.

Mon, 08/29/2011 - 14:14 | 1612318 gmrpeabody
gmrpeabody's picture

Next up: less pepperoni and cheese on the pizza.

Mon, 08/29/2011 - 15:27 | 1612626 Mountainview
Mountainview's picture

And watch the CDS...and the European Central Banks reaction...

Mon, 08/29/2011 - 18:39 | 1613304 Bobbyrib
Bobbyrib's picture

I had the same thought when I read the title of the article.

Mon, 08/29/2011 - 13:42 | 1612196 achmachat
achmachat's picture

I can't believe how short this was!

Mon, 08/29/2011 - 13:54 | 1612243 Albertarocks
Albertarocks's picture

You're not looking in your pants are ya?

Mon, 08/29/2011 - 14:06 | 1612286 IBelieveInMagic
IBelieveInMagic's picture

Ha. Or he has a trusting nature.

This is exactly in line with my thinking -- just dodge and obfuscate for a while and then business as usual. As long as no one is willing to rock the boat to call USA's bluff on debt ceiling, why would others inflict austerity on themselves? It is all just fiat currency right!

Mon, 08/29/2011 - 14:10 | 1612303 Albertarocks
Albertarocks's picture

Did everyone miss this?  Bernanke is suggesting that he's prepared to raise rates, not lower them.  He's saying he's expecting the effects of "policy accomodation" to be reflected in stronger economic activity and job creation... and inflation.  The policy he's warning about is that of hiking rates: http://www.bloomberg.com/video...

Mon, 08/29/2011 - 14:15 | 1612325 IBelieveInMagic
IBelieveInMagic's picture

Yah! We are saved. The misery is over.

Mon, 08/29/2011 - 14:16 | 1612332 gmrpeabody
gmrpeabody's picture

Well, after all, he CAN'T lower them!

Mon, 08/29/2011 - 14:38 | 1612403 Highrev
Highrev's picture

nice AR                           BVV

Mon, 08/29/2011 - 13:45 | 1612203 nope-1004
nope-1004's picture

Rats will circle a cage many times before realizing the effort is futile.

Expect Italy to circle the cage a few more times.

 

Mon, 08/29/2011 - 13:45 | 1612205 fwchiro
fwchiro's picture

Why suffer through austerity when you can just live it up spending all the way to the bottom as you wait for Merkel to backstop your bankruptcy?

Mon, 08/29/2011 - 13:46 | 1612208 stevegee58
stevegee58's picture

LOL Finally goin' after them tax cheats huh?

I remember my Italian barber from when I was a kid saying to my dad (an accountant), "Oh, back in the ola contry we no-a pay-a taxi."

This is the end, beautiful friend, the end.

Mon, 08/29/2011 - 13:47 | 1612213 misterc
misterc's picture

Has anybody been to Rome lately? When I went there in 2008, the city was filled with gipsy hords, begging on street corners. Subways were dirty and pickpocketing was a constant threat. Prices for everything were skyhigh, infrastructure was really bad. I cannot understand how the Pimco dudes can buy Italian bonds. The country is a real mess!

Mon, 08/29/2011 - 14:02 | 1612274 Pegasus Muse
Pegasus Muse's picture

With slight modification, sounds like NYC, LA, Washington DC, ....

Mon, 08/29/2011 - 14:08 | 1612291 IBelieveInMagic
IBelieveInMagic's picture

You can see the beauty when you are in the inside circle!

Mon, 08/29/2011 - 14:16 | 1612322 Waffen
Waffen's picture

I was last there in 1998 and thats how it was then.  I am sure Rome has been like that since 400 AD.

Mon, 08/29/2011 - 13:47 | 1612217 SheepDog-One
SheepDog-One's picture

'Vague in details'...aw screw it, it got us thru the morning anyway....time for 3 hour afternoon pasta and wine siesta.

Mon, 08/29/2011 - 14:04 | 1612279 knukles
knukles's picture

Dessert?  Most certainly!  Waiter, I'd like a blow job for desert.  Mouth full of KY, no teeth, yes, a gummy if you please.  Put it on Mr. Berulsconi's account.

Mon, 08/29/2011 - 13:48 | 1612221 ZeroPoint
ZeroPoint's picture

Here's a new flash: High earners tend to be tax cheats.

 

Once again greed prevails. You have to go after people and corporations who have money. Everything else leads to revolution.

 

 

Mon, 08/29/2011 - 13:48 | 1612222 kridkrid
kridkrid's picture

Austerity for thee, but not for me.  Nobody has been punished yet for kicking a can further down the road.  Why not?  It'll work... until it doesn't.  Then it'll really suck.

Mon, 08/29/2011 - 13:49 | 1612223 Fuh Querada
Fuh Querada's picture

Yeah, well we all know how assiduously the Greeks pursued their austerity plan since May 2010. Last week they finally stopped paying pensions to dead people.

I wonder what percentage of the Italian population earns more than 90000€ p.a. declared income.

Mon, 08/29/2011 - 13:59 | 1612235 knukles
knukles's picture

Those that did/do/indeterminate emigrated to Libya, comfortably living it up in the Berlusconi Ex-Pat Bunga-Bunga Compound.

Mon, 08/29/2011 - 13:49 | 1612224 johngaltfla
johngaltfla's picture

That's worked so well, in, uh, well, maybe not so much, the United States.

Perhaps a review of the works of Adam Smith might help the idiots, but I doubt it. Capital flows where it is free to mulitply. Italy and the U.S. ain't it.

Mon, 08/29/2011 - 14:01 | 1612269 fwchiro
fwchiro's picture

I have tried to let my capital multiply by putting it all together under my mattress, but no joy.  Do you have any suggestions like mood lighting or something?

Mon, 08/29/2011 - 14:13 | 1612314 yabyum
yabyum's picture

Have you tried Barry White on the CD?

Mon, 08/29/2011 - 14:56 | 1612498 fwchiro
fwchiro's picture

No I was using Pink Floyd's "Money", but maybe its time to pull out the big guns with a little Barry...

Mon, 08/29/2011 - 16:16 | 1612779 johngaltfla
johngaltfla's picture

As I suggested 4 years ago...CHF bonds...but hey, I'm just a blogger. We don't count....

Mon, 08/29/2011 - 13:51 | 1612228 knukles
knukles's picture

LOL
Another announcement from the EU Miltinational Diverse Pan European Fiscal and Monetary Policies Coordination, Representation, Extemporization Super Le Grande Design Underpriviliged Special Olympic Can Kicking Charade Committee. 

 Bon jour!

Mon, 08/29/2011 - 13:52 | 1612232 Ausperity
Ausperity's picture

Wishful thinking is better than no thinking at all...

Mon, 08/29/2011 - 14:20 | 1612347 gmrpeabody
gmrpeabody's picture

Ya think?    ; )

Mon, 08/29/2011 - 13:53 | 1612237 entendance
entendance's picture

on September 10, 2011: Italy

http://www.entendance.com/forums/viewtopic.php?f=6&t=784&st=0&sk=t&sd=a&start=90#p18582

 

On September 17, 2011: New York, London, Madrid, Frankfurt, Milan...

http://www.entendance.com/forums/viewtopic.php?f=6&t=801&p=19008#p18949

 

WAKE UP!

Mon, 08/29/2011 - 13:54 | 1612244 pacdm
pacdm's picture

Who cares anyway just look at the markets  here and in Greece all is well.

Mon, 08/29/2011 - 13:56 | 1612246 TruthInSunshine
TruthInSunshine's picture

The EU situation is resolved.. resolved I tell you!

Jawboning - nonstop- and vague, unspecified, no actual articuable plan, irrational jawboning- works wonders!

Until it doesn't...

Show me the money, the EU will ultimately say, and Germany will say "beeeeyotch!"

Mon, 08/29/2011 - 13:56 | 1612255 knukles
knukles's picture

Deutschemark Beeeeytches!

(couldn't resist)

Mon, 08/29/2011 - 13:55 | 1612247 knukles
knukles's picture

And with that news, the Dollar rallies opposite the Euro on the fast road to the bottom, followed closely by the Swissy, with the Zimbabweian Dollar in the lead.

Tough day for a bear raid on gold, sweetie.

Mon, 08/29/2011 - 13:56 | 1612249 zeroman
zeroman's picture

HERE IS SOME REALITY.  THE U.S. BUSINESS SECTOR LESS REAL ESTATE AND GOVERNMENT SPENDING IS MOVING FORWARD.  WE ALL FORGET THAT 95% OF OUR ECONOMY IS NOT WHAT YOU SEE ON WALL STREET; THAT IS, WE ARE SMALL BUSINESSES ALL ACROSS THIS COUNTRY WHO HAVE BECOME LEAN AND MEAN, CREATIVE, AND HAVE LOWERED OUR PAYROLLS TO WORSE CASE SCENARIOS, AND HAVE A MODEL FOR PROFITABILITY.  WE MAKE TOO MUCH OF THE BANKSTERS WHO ARE NOT LOANING US MONEY ANYWAY. THEREFORE, WE HAVE FIGURED OUT HOW TO SURVIVE AT THESE LOWER LEVELS.  WOULD WE LIKE TO GROW? SURE. DO WE NEED BANKS OR EUROPE TO MAINTAIN WHERE WE ARE? NO.  THEREFORE, I THINK YOU HAVE CLEARLY OVERSTATED THE RELEVANCE FOR US TO SURVIVE BECAUSE EUROPE HAS PROBLEMS.  WHY CANNOT WE BEGIN TO DISCUSS HOW TO SUCCEED WITHOUT THE GOVERNMENT AND WITHOUT THE CORPORATE ELITIST AND STILL NOT BE DOOMSSAYERS AS USUAL?

Mon, 08/29/2011 - 13:57 | 1612258 knukles
knukles's picture

Why can't we all just get along?

(Huming Kumbayah)

Mon, 08/29/2011 - 13:59 | 1612262 irishlink
irishlink's picture

You are only seeing the beginning of the consumer deleveraging and we are on the cusp of another dip in confidence and earnings. Can you cut back more?

Mon, 08/29/2011 - 14:10 | 1612285 TruthInSunshine
TruthInSunshine's picture

You are only seeing the beginning of the consumer deleveraging and we are on the cusp of another dip in confidence and earnings. Can you cut back more?

 

The more relevant question to ask, as a function of basic math, is whether MOST can NOT cut back more, given what will be their new economic reality (aka personal/household/small biz budgets).

Deleveraging is a nasty, drawn out affair, and we're only in the early, early innings of the deleveraging ball game.

Mon, 08/29/2011 - 14:15 | 1612324 pods
pods's picture

Of course if the FED.gov were to remove the 10% or so of GDP which is now built into the system everything would implode no matter how lean and mean you are.

The explosion in debt is relevant to everyone.  Pretending that you are insulated is folly.

BTW, Caps Lock key is on the left side of the keyboard, in between the Shift and Tab key.

pods

Mon, 08/29/2011 - 17:39 | 1613132 andybev01
andybev01's picture

Decaf.

Mon, 08/29/2011 - 13:56 | 1612250 irishlink
irishlink's picture

Slowly but surely the extent of this disaster is starting to dawn on the public at large. I have heard so much concerned conversatoin over this weekend than ever before. Greece must be close to throwing in the towell and the Italians will not do austerity.  

Mon, 08/29/2011 - 14:00 | 1612266 knukles
knukles's picture

Let's not get too hasty on this...  Let's hear what Goldman's got to say.

Mon, 08/29/2011 - 13:56 | 1612256 Dick Darlington
Dick Darlington's picture

Aaaaaand scene!

Italian politicians, like all politicans, just said out loud the two words which have been sprayed on countless walls all over Italy: F*ck austerity!

 

 

 

Mon, 08/29/2011 - 14:00 | 1612263 rubyruffruff
rubyruffruff's picture

chin chin 2 the new austerity measures.....bung bunga party starts @ 11pm

Mon, 08/29/2011 - 14:01 | 1612268 props2009
props2009's picture


This is funny. JohN pAULSON IS DOWN 40% ON HIS ADVANTAGE FUND
http://capital3x.com/?p=529

How could seemingly smart people with 2bn capital become dumb with 30bn capital?

Mon, 08/29/2011 - 14:01 | 1612273 jmc8888
jmc8888's picture

Why should they cut? For fraud?

 

The answer to the problem isn't cutting shit.  Of course stuff that's worthless should be cut.  But that's because it's worthless, not because 'we have fraudulent debt that needs to be paid off'.

Cancel the fraudulent debt.  Worldwide.  Each country can individually. 

Let the banksters have the austerity.   That's who NEEDS it.

 

It's the right thing that Italy didn't go down the route of cutting stuff to pay off fraud.

Of course going after tax cheats to pay off fraud seems a bit funny too.  I don't think the italian mob will take too kindly to that.

Pleasure vs Pain principle is bullcrap.  It's an idiots 'principle'.

Thus wanting 'pain' so that people finally notice, won't do shit.  You'll just have pain.  While people are still clueless why.

If they rise up to a mob, you don't get American Revolution.  You get French revolution.

 

We need Glass-Steagall because it's the REASONABLE course of action.

We don't need Austerity to force PAIN in the hopes of a positive outcome via mobs.

Pleasure vs. Pain...another worthless metric...another false dichotomy.  Another fools errand.

Mon, 08/29/2011 - 14:04 | 1612281 irishlink
irishlink's picture

Austerity is creating a consumer death spiral that is like a tornado tearing through western economies. It is pulling money out of the economy in a backward feeding loop that is ravenous in its power. 

Mon, 08/29/2011 - 14:18 | 1612337 kridkrid
kridkrid's picture

What goes up, must come down.  The feedback loop of compounding debt felt just fine when we were able to live off of the fantasy of perpetual growth.  Math is such a bitch.  The feedback loop of deleveraging will be painful.

Tue, 08/30/2011 - 03:54 | 1614085 paulie
paulie's picture

Thank you my friend, the first and only intelligent comment on this one.

The way out of it is not austerity but a wage boost which should trigger domestic demand and thus growth. It's only through growth that we (Italians) can get out of it.

 

Paulie

 

Mon, 08/29/2011 - 14:05 | 1612282 bigdumbnugly
bigdumbnugly's picture
 Italy.. To Pursue Tax Cheats Instead

their drawing straws over there to see who actually has to audit the sicilian families

 

 
Mon, 08/29/2011 - 14:08 | 1612292 Sequitur
Sequitur's picture

Look upon Italy, friends. This is the ghost of Christmas future for the United States of America.

Nothing will be done about the massive U.S. debt. Nothing, until it is way too late to do anything to stave off disaster. People respond only when threatened with loss of hearth and home. Only abject fear and capitulation will sove the U.S. debt crisis, and by then, choices will be severely limited.

Mon, 08/29/2011 - 14:09 | 1612295 PontifexMaximus
PontifexMaximus's picture

Non mollano! The casta politica knows only one language: la frusta, and it has to hit them hard. 10 year yields beyond 6,5 %, that's what they understand. Ferragosto is over, hard times are coming for the bel paese and the casta politica will do everything to keep themselves in power and to get a pay check profumato. Don't throw the webcam in pz. Navona too far away, you might use it sooner than u like!

Mon, 08/29/2011 - 14:11 | 1612307 eleven
eleven's picture

Bel paese i miei coglioni!  E un pezzo di m....

Mon, 08/29/2011 - 14:09 | 1612297 eleven
eleven's picture

Sti Cazzi!

Mon, 08/29/2011 - 14:11 | 1612306 MFL8240
MFL8240's picture

Why does anyone find this news alarming yet the US markets are up 200 points on depressed economic news, while gold gets hammered??

Mon, 08/29/2011 - 14:12 | 1612308 Highrev
Highrev's picture

if you think that was the most provacative of the austerity package you're either lying or ignorant

Mon, 08/29/2011 - 14:13 | 1612310 kito
kito's picture

did tyler cover this?

funny how the rebels first concern is a central bank

http://www.cnbc.com/id/42308613/

Mon, 08/29/2011 - 14:18 | 1612338 Waffen
Waffen's picture

Yep the Rothschilds in action again, must set up their government.

Mon, 08/29/2011 - 14:36 | 1612418 eleven
eleven's picture

Take a look at the video on the first psot of this thread...

 

http://www.godlikeproductions.com/forum1/message1614135/pg1

Mon, 08/29/2011 - 14:19 | 1612340 Seasmoke
Seasmoke's picture

Get it all from the Pope

Mon, 08/29/2011 - 14:22 | 1612350 MrBoompi
MrBoompi's picture

I have a novel idea...how about raising the taxes on the wealthy AND cracking down on tax cheats?  Yea I know, they're probably the same folks actually....

Mon, 08/29/2011 - 14:23 | 1612359 Sudden Debt
Sudden Debt's picture

So they are going after the Mob again.... good luck with that...

 

Mon, 08/29/2011 - 22:24 | 1613788 Buck Johnson
Buck Johnson's picture

The Western world is going belly up and many know it.  What is happening is that they are trying to get out to a safe place before the final collapse happens.

Tue, 08/30/2011 - 04:13 | 1614092 Gandalf6900
Gandalf6900's picture

austerity in 3....2.....1.....go!

Mon, 09/05/2011 - 09:55 | 1634142 shacai
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