Update: The Italian Government Drops Its Proposal to Raise Taxes

    
     Despite pressure from the European Monetary Union, Italian Prime Minister Silvio Berlusconi has dropped his government's proposal to raise taxes on the upper classes as part of Italy's austerity program, according to Breitbart.

     I had posted earlier this month about the loss of sovereignty of members of the Eurozone.  This latest round of austerity measures had included a tax increase, despite opposition from Berlusconi, in addition to spending cuts. After the coalition government's junior partner, the Northern League, objected to the tax increase, the government proposed a further increase of measures to collect delinquent taxes.  The new program will equal the $66 billion figure of the original proposal, Breitbart reports.  Thus, as before, the austerity program will balance Italy's budget by 2013 instead of 2014, which had been the original plan prior to the new pressure from the Monetary Union to accelerate the program.  Nevertheless, this process underscores the potential loss of national sovereignty of members of the Eurozone beyond the loss of monetary policy, such as has been most evident in Greece, for example.  Greece raised taxes, which has decreased sharply its growth rate, in addition to cutting spending. 

     The dropping of the proposed tax increase will avoid a blow to Italy's meager economic growth rate, as higher taxes reduce spending, work and investment.  I commend the Italian centre-right coalition government for resisting the European Monetary Union's pressure.  Italy is not only modelling sound fiscal policy, but standing up for national sovereignty.