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 Tuesday, 24 December, 2002, 13:31 GMT
Italy meets 2003 budget deadline
Italian street scene
A tax amnesty hopes to raise 8bn euros
Italy's conservative government has passed the 2003 budget, which includes a controversial package of tax amnesties, billions of euros of tax cuts and privatisations.

The budget aims to lower Italy's high deficit, but has been criticized for letting off tax cheats and making over-optimistic economic forecasts.

The upper house of parliament had already approved the bill after an all-night session in which one deputy threw his mobile phone at another.

The budget includes 7.5bn euros (5bn; $7.5bn) in corporate and personal income tax cuts, which the government hopes will boost economic growth.

To offset the lower revenues, the budget includes 8bn euros in spending cuts, a tax amnesty expected to raise about 8bn euros through fines, and privatisations to bring in 4bn euros.

The lower house of parliament voted 298 to 110 in favour of the 2003 budget bill, after more than three months of parliamentary debates.

Budget criticism

The EU's head of monetary affairs, Pedro Solbes, has criticised the budget for depending too heavily on one-off measures and has warned that forecasts for next year are "imprudent".

In October, the International Monetary Fund said the tax amnesties would undermine the government's power to collect taxes in the future.

Under the amnesty, tax cheats and those with overdue television licence fees, car registrations and rubbish removal taxes, can settle accounts by paying a one-off fine.

The budget also forecasts a deficit of 1.5% of gross domestic product, but economists question whether that can be achieved.

After an expected deficit of 2.2% this year, economists expect the deficit to creep up to 2.5% in 2003.

The EU Stability Pact, which underpins the euro, sets an upper limit of 3%.

See also:

05 Dec 02 | Business
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20 Nov 02 | Business
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