Factbox: What's in Italy's austerity package?

ROME (Reuters) - Italy's austerity package approved by parliament Friday aims to cut the fiscal deficit by around 48 billion euros to achieve a balanced budget in 2014 and prevent Italy from being sucked into the euro zone debt crisis.

Most of the measures will only take effect in 2013 and 2014. This year and the next the latest package adds only marginally to deficit cuts worth 25 billion euros the government approved last year to rein in its accounts in 2011 and 2012.

Here are some key measures of the austerity plan, which received final parliamentary approval Friday.

The package initially came in for strong criticism even within Prime Minister Silvio Berlusconi's government, but a sharp selloff of Italian assets earlier this month prompted an unusual bipartisan effort to push it through swiftly.

SAFEGUARD CLAUSE

To reassure jittery markets, the government has inserted a "safeguard clause" in the package that cuts tax breaks for families and companies if savings from a tax reform plan fail to materialize. The clause will permit a reduction in the deficit of 4 billion euros in 2013 and 20 billion euros in 2014.

SPENDING CUTS

* Cuts to the budgets of central government ministries, worth a total of 1 billion euros in 2012, 3.5 billion in 2013 and 5 billion in 2014.

* A salary hike freeze for public workers will be extended to 2014, among other measures aimed at the public sector.

* A 10 percent cut in financing for political parties, and limits on compensation for elected officials.

* Funding to town councils and provinces reduced by 3.2 billion euros in 2013 and 6.4 billion euros in 2014.

* Cuts to health spending worth 2.5 billion euros in 2013 and 5 billion euros in 2014.

* Savings from state pensions, including delaying retirement and a tax on pensions over 90,000 euros annually. The retirement age for women working in the private sector jumps to 65 years from 60, but only starting in 2032.

* The introduction of automatic increases to the retirement age on the basis of regular assessments of life expectancy will be brought forward to 2013 from 2015.

REVENUE MEASURES

* Privatizations of state-controlled entities, with the economy ministry required to approve the sale of one or more stakeholdings by the end of 2013.

* "Ticket" payments for certain hospital and medical visits

* Tax hike on holders of financial instruments worth 725.1 million euros in 2011, 1.3 billion in 2012, 3.8 billion in 2013 and 2.5 billion in 2014.

* Higher tax rate on banks, financial companies and insurers

* Additional tax on variable compensation for managers like stock options and bonuses

* A limit on tax deductions toll road operators like Atlantia can claim on sums paid into a so-called "clean-up fund" to 1 percent from 5 percent at present, under budget rules on the amortization of infrastructure assets.

* A higher tax on petrol and diesel that will net the state 1.7 billion euros.

* Higher income from betting and lotteries worth about 1.9 billion euros between 2011 and 2014.

* An increase in road tax for large cars.

* An amnesty for minor tax disputes on payment of a small sum or a percentage of the amount being disputed. The budget also includes tax breaks for young entrepreneurs, and tax benefits for agreements that boosts productivity.

HOW URGENT IS DEFICIT REDUCTION FOR ITALY?

Urgency on pushing through the deficit cutting measures has shot up since fears of contagion spreading to Italy grew, driving a steep selloff in Italian stocks and bonds Monday and last Friday.

Italy is vulnerable due to its massive public debt and its chronically weak economic growth -- the most sluggish in the euro zone over the last decade.

A prudent fiscal policy, low private debt and a sound banking system had so far shielded Italy from the worst of market volatility since the outbreak of the Greek debt crisis.

(Writing by Deepa Babington)