Italy cut this year's growth forecast to 0.8 percent on Tuesday and laid out a plan to lower income taxes through a 4.5 billion euro reduction in public spending. The "extremely prudent" forecast lowered the 1.0 percent growth estimate made by the previous government, Prime Minister Matteo Renzi told journalists after the cabinet approved the new financial plan.
The International Monetary Fund and the European Commission both see the eurozone's third largest economy growing by just 0.6 percent in 2014. The government promised to reduce taxes for some 10 million people who earn less than 25,000 euros ($34,500) gross a year, bringing low earners a 80 euro saving a month from May.
The move will cost "around 6.7 billion euros" this year, which will be financed by reducing public spending by 4.5 billion euros and raising 2.2 billion euros through financial transactions. "This plan is an act of social justice. There are those who have taken much, too much over the years, and it is time they gave some back," Renzi said.