The Italian cabinet agreed to $65 billion in spending cuts and tax hikes in an emergency meeting meant to forestall a potential credit crisis, according to UPI. The European Central Bank, which is buying Italian bonds to hold down yields, said the purchases were contingent on Italy agreeing to a quicker path to a balanced budget, The New York Times reported Saturday. The new measures would ramp up Italy's efforts to do so. The new austerity package would eliminate the budget deficit by 2013, a year earlier than previously planned. Currently, the budget deficit is 3.9 percent of Italy's gross domestic product. The plan calls for raising the capital gains tax from 12.5 percent to 20 percent, except for government bonds, and raising income taxes 5 percent for those earning at least $128,000 and 10 percent for those earning at least $213,000. The tax hike would be in effect for two years, the Italian news agency ANSA reported. "Our heart bleeds to have to do this, we who bragged never to put our hands in the pockets of Italians. But the world situation changed, and we found ourselves faced with the hugest global crisis ever," Prime Minister Silvio Berlusconi said. "We're personally pained to have to take these measures, but we are satisfied," he said. The plan also calls for canceling several national holidays and cutting 54,000 elected positions in local governments. President of the Lombardi Region Roberto Formigoni said the cuts would have "a depressive effect," on the country's economy.
