The Italian government today announced a package of drastic anti-inflation measures designed to right a massive balance of payments deficit, protect the lira, combat recession and bolster this country's waning export trade.
The emergency measures passed by government decree today include a $3-per-bottle exise tax on alcoholic beverages other than wine and beer, an across-the-board rise in taxes that is particularly sharp against luxury goods, harsher tax evasion measures, and a rise in the price of oil products -- the third so far this year -- that brings the price of gasoline to $3.37 a gallon.
The plan also includes an enforced loan to the government based on a per capita contribution of 0.5 percent of income. The resulting "solidarity fund," estimated at more than $700 million, will be used for investments in the less-developed south and for ailing industries.
As a whole the package, which will have to be ratified by parliament within two months' time, is expected to bring an additional 3.7 trillion lire ($4.4 billion) into state coffers and to cut a mammoth public deficit by another 2.8 trillion lire ($3.3 billion).
At the same time another 320 billion lire ($380 million) will be spent by the state to help Italy's flagging export industries. This will be done by subsidizing a large portion of the social charges, generally paid by industry, that help make the cost of labor higher in Italy than in many of the countries with which it competes for world markets.
The excessively high cost of labor is considered one of the principal causes of Italy's current 21 percent inflation rate, and the government's original plan was to modify the escalator clause through which wages are indexed to consumer prices.
When the powerful Italian labor unions threatened to respond with a general strike, the government came up with the plan to finance social charges, with the enforced loan that will spread the burden equally throughout Italian society.
The other major causes of Italian inflation, now the highest in the European Economic Community, are the public deficit of 41 trillion lire ($49 billion) -- an unprecedented 13 percent of national income -- and energy costs.
Italy imports more than 700 million barrels of oil a year and has been more adversely affected than some of its neighbors by the latest increases in oil prices. According to Budget Minister Giorgio la Malfa, the plan announced today aims "to bring Italy's inflation rate into line with that of other EEC countries within three years."