Brussels, 27/10/2014 (Agence Europe) - In response to the request for information made by the European Commission, the Italian and French authorities on Monday 27 October officially announced their intentions of changing their draft 2015 budgets to include additional measures.
In order to step up the budgetary consolidation effort, the Italian government has undertaken to adopt the following additional measures in its draft Finance Bill for 2015: - €3.3 billion from the fund originally set for lowering the tax burden; - the VAT reverse-charge scheme will be extended to the retail sales sector, a measure put at €730 million and which will be supported by a surcharge on excise taxes. It must be authorised at European level; - a reduction of €500 million from the envelope on the national co-funding of projects receiving aid under the European Cohesion Fund.
These measures will bring the structural budgetary effort from 0.1% of GDP to 0.3% (not adjusted for economic effects), states the Italian Minister for the Economy and Finances, Pier Carlo Padoàn, in a letter to the outgoing Commissioner for Economic and Monetary Affairs, Jyrki Katainen. In its specific recommendations to Italy, the European level required a structural effort of 0.5%.
Stressing Italy's economic struggles, with GDP which has plummeted by 9% from 2008 levels, the minister stressed that the Italian government is doing all in its power to prevent a fourth year of recession in the peninsula, which would also have an impact on the sustainable nature of Italy's debt, the second-largest in relation to GDP of all the EU countries (133.8% in the second quarter of 2014). On this point, an “ambitious” privatisation programme, representing 0.7% of GDP, will be set in place to bring this debt down.
The French additional effort. In its reply to the Commission, France has announced that its draft budget will be changed to include additional measures to fight tax evasion and tax fraud, reduce the servicing of public debt and change the European accounting base. These measures will allow the country to achieve a structural budgetary effort of “more than 0.5% of GDP” in 2015, which is in line with the requirements of the Stability and Growth Pact, states Paris. They are in the region of €3.6 billion, states Economy Minister Michel Sapin. (MB)