Italy, a country mired in economic turmoil, is facing a powerful decision in the coming months. An election, to be held at the end of February, will decide the country’s future, and possibly the future of the entire Eurozone area. Early campaigning suggests there is a single key to victory; promises of cutting taxes, the trouble is everybody seems to be doing it.
The most recent polls put the country’s current Prime Minister , Mario Monti, at 15% of the popular vote. Berlusconi’s center right alliance garnered 28% of the vote. The leader, by quite a big margin, is the center left group led by ex communist party member, Luigi Bersani.
Interestingly, the Five Star Movement holds about 10 percent of the vote. the political bloc is led by the comedian Beppe Grillo. That part is likely to command a substantial voice in the country’s next parliament, and has already managed to make a dent in some of the country’s regions.
Italy’s complex political system is made up of a number of political parties, held together by vague alliances. One of the surer ways of shoring up support is to promise lower taxes. Both Berlusconi and arch Rival Monti are promising to do just that.
The move may seem hypocritical of Monti, the economics professor was installed as the Prime Minister of Italy in 2011 in the midst of a fiscal crisis. His job was to redress the balance in the country’s budget, much of that work involved raising taxes. Now as the country sinks into deep recession he claims to be in favor of the opposite.
Monti has said that the country’s property tax could be restructured to move the burden off citizens unable to deal with its pressure. Monti is not officially campaigning because he holds the position of Senator for Life, to which he was appointed three days before his appointment as Prime Minister in 2011. In a game of exciting political promises the economist will always be beaten by the media mogul playboy billionaire.
Berlusconi, who had claimed retirement from high powered politics after his most recent resignation, is going much much further than Monti. He promises an end to the first time buyer’s property tax. That would mean an instantaneous drop of €3 billion from government revenue. Berlusconi is currently appealing a prison sentence for tax evasion.
Italian politics will take center stage in the minds of those trying to predict the outcome of the euro crisis, at least until election day. Italy is deep in recession, and deep in debt. It seems there, as in the rest of Europe, neither problem can be solved without exacerbating the other, and all but reducing gains made on one side of the argument to nothing.
If a difficult government is elected in Italy, like that elected in Greece last year, there will be difficulties across the Eurozone. Italy is not Greece, Italy is much much bigger. A potential Italian default make Greek troubles look tiny to those in power in Brussels.