Monti's "Save Italy" Package Sure to Cause "Super Recession"
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Super Mario has a five-point plan to "Save Italy".
- Raise more than 10 billion euros from a new property tax
- Impose a new tax on luxury items like yachts
- Raise value added tax
- Crack down on tax evasion
- Increase the pension age
The above package was dubbed the "Save Italy" package by Prime Minister Mario Monti. Supposedly it will boost growth.
While I agree pension reform is much needed, there is not a single thing in the package to boost growth. Italy is in recession. Raising taxes in a recession is the last thing you want to do, yet four of Monti's five ideas raise taxes.
This proposal may temporarily placate the bond market, but Italy is headed for one "super recession" if Mario's mix of idiotic tax hikes passes. Instead, Italy needs to cut wasteful government spending and lower taxes.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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