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News Analysis: Early fault lines showing in Renzi's support in Italy

English.news.cn   2014-04-09 06:09:04

By Eric J. Lyman

ROME, April 8 (Xinhua) -- Italian Prime Minister Matteo Renzi said Tuesday he found a combination of spending cuts and other offsets to allow for a 7-billion-euro (9.7-billion -U.S. dollar) tax cut this year, though reactions to the plan are giving signs that the new leader's honeymoon period may be starting to end.

Renzi became prime minister Feb. 22 after maneuvering the ouster of predecessor Enrico Letta. Italians liked his reform minded agenda, which promised to do everything from downsizing the Senate and reducing the size of the public administration to sparking growth and lowering taxes.

With high approval levels and a lack of leadership figures waiting in the wings, Renzi's earliest reform plans went forward with little visible opposition. But grumbles started with his plans to dramatically change the role of the upper house of parliament, analysts said.

"Renzi's come into power with a clear intention of shaking things up and in a country with figures in entrenched positions of power, that is bound to encounter some opposition," Gian Franco Gallo, a political risk analyst with investment bankers Hildebrandt and Ferrar told Xinhua.

"It is clear this is a problem Renzi and his advisors have anticipated," Gallo said. "What is less clear is how they will confront it."

Italy's Economic and Financial Document, known by its Italian initials DEF, sketches the general budget framework for the next three budgets. The document, which could slow growth prospects in the near term while keeping budget reduction plans flat, must be presented to the European Commission before being formally accepted.

The opposition came in the form of lawmakers not part of Renzi's coalition, led by Renato Brunetta, the head of the bloc of supports of former prime minister and billionaire media mogul Silvio Berlusconi in the lower house of parliament.

A few days earlier, Berlusconi -- who will soon start a year of house arrest or community service in connection with a false accounting and tax evasion conviction -- criticized Renzi's Senate reform plan, arguing he should be consulted. And on Tuesday, Brunetta accused Renzi of juggling the books to make the tax relief possible without adding to the government's massive debt.

"We hope Rezni did not use bookkeeping tricks to reach this conclusion because his plan will be judged, not only here in Italy, but in Europe as a whole," Brunetta said.

There are also signs of dissention in his own center-left political party, as well as from powerful Italian labor unions -- usually a source of reliable support for center-left leaders. Pollsters warn that his public support could prove fickle if he gets involved in a prolonged political battle that damages his image as a quick, effective, and decisive leader.

"The support levels that have risen so quickly for Renzi could reverse course just as quickly," said Antonio Frustra, a technical expert with the polling firm Opinioni.

The tax reduction plan, which will give low wage earners an average of 80 euros a month starting in May, was previously announced. It will cost the government around 7 billion euros this year and 10 billion euros per year starting in 2015. But he said Tuesday he will be able to make the move revenue neutral, mostly by reducing spending such as eliminating some redundant government entities, cutting back on public service hires, and reducing the salaries of top public sector managers, as well as a series of smaller tax-related offsets.

Editor: Mu Xuequan
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