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Italy Senate OKs austerity plan, govt survives
Italy Senate approves euro54 billion ($70 billion) austerity plan; govt survives confidence vote
By The Associated Press

ROME (AP) ' Italy's Senate on Wednesday approved the government's disputed austerity package aimed at reducing the country's deficit by more than euro54 billion ($70 billion) over three years.

The upper chamber voted 165-141 with three abstentions to approve the package, which was put to a confidence vote to ensure Premier Silvio Berlusconi's allies united behind him after weeks of bickering over details of the plan.

Had the vote failed, Berlusconi would have been forced to resign, a prospect lawmakers clearly wanted to avoid given the nervousness with which financial markets have viewed Italy's ability to rein in its debt and spur growth.

The European Central Bank had demanded stiff austerity measures to calm the markets. It has spent billions over the last month buying up Italian government bonds to get Italy's borrowing costs lower and help them avoid becoming the next eurozone nation to need an international bailout.

The package now goes to the lower Chamber of Deputies, where Berlusconi also maintains a majority.

Finance Minister Giulio Tremonti's office confirmed that the final changes in the plan, including pension reform that had been resisted by Berlusconi's coalition allies, significantly increases the dent in Italy's deficit. Italian media reported the latest new taxes and spending cuts totaled euro4 billion ($5.7 billion).

When the deficit-battling package was first unveiled Aug. 12, the package added up to euro45.5 billion ($64.1 billion). But weeks of waffling by squabbling coalition allies whittled down the new or higher taxes and spending cuts, further shaking the markets' confidence, and the government beefed up the measures at a Cabinet meeting Tuesday.

"The decisions taken yesterday by the Cabinet have strengthened the measures significantly," Antonio Azzollini, the head of the Senate's budget committee, told the assembly.

Azzollini, from Berlusconi's party, said sales taxes on goods and many services would be raised from 20 percent to 21 percent, an additional income tax of 3 percent would be on levied on incomes exceeding euro300,000 (nearly $450,000), and the timetable for raising the retirement age for women would be speeded up from 2016 to 2014.

Berlusconi had originally shied away from putting the package to a vote of confidence in his government, but decided to speed up its passage after ECB president Jean-Claude Trichet, during a visit Saturday, appealed for quick, decisive action to save Italy's credit reputation.

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