Brussels, 11/10/2012 (Agence Europe) - On Wednesday 10 October, the Italian government introduced spending cuts of €10 billion for the 2013 budget. Italy's GDP is expected to shrink this year by 2.4%. The new “stability law” included a reduction in income tax for the lowest paid from 23% to 22% on the first €15,000 of income and from 27% to 26% on the next level of income (up to €28,000), which will cost some €5 billion; increasing VAT from 21% to 22% (rather than 23% as previously suggested) in July 2013 and raising the reduced-rate of VAT to 11%; a new tax in 2013 on financial transactions (not sovereign bonds) which will be adjusted to match EU FTT developments (see EUROPE 10706); cutting health spending by €1 billion and regional spending by €4.4 billion in 2012, €10.3 billion in 2013 and €11.2 billion in 2014); public investment of €1.6 billion in public transport and an increase of some 3% in universities' budgets. The government wants to increase state control of local infrastructure and powers in order to increase efficiency and stamp out corruption and tax evasion. (FG/transl.fl)