Italy PM calls confidence vote on spending cuts

ROME Mon Jul 30, 2012 3:00pm EDT

Italian Prime Minister Mario Monti gestures next to German Chancellor Angela Merkel during a news conference at Villa Madama in Rome July 4, 2012. REUTERS/Max Rossi

Italian Prime Minister Mario Monti gestures next to German Chancellor Angela Merkel during a news conference at Villa Madama in Rome July 4, 2012.

Credit: Reuters/Max Rossi

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ROME (Reuters) - Italian Prime Minister Mario Monti's government called on Monday for a confidence vote in the Senate to accelerate the passage of more than 4 billion euros ($4.90 billion) in spending cuts this year.

The cuts would enable Italy to delay a planned sales tax increase and rein in its budget deficit.

Monti is staking his government's future on passage of the decree before the summer recess. He is considered certain to win as his parliamentary allies have guaranteed their support.

Parties will declare their voting intentions starting at 0300 EDT on Tuesday, and ballots will be cast from about 0420 EDT. Final approval is expected to come later this week in a vote in the lower house Chamber of Deputies.

The new savings for this year are in addition to planned government spending cuts of 10.5 billion euros unveiled in an austerity package announced in December.

The austerity package included a 2 percentage point increase on sales tax - currently set at 10 percent and 21 percent - due to take effect this October. The proposed expenditure cuts will delay the increase until July next year.

Some of the reductions will help Italy, the euro zone's third-biggest economy, to contain its budget deficit as it remains under pressure to convince financial markets it can manage its high debt burden.

Among the measures included in the decree are reductions in state health-care expenditures and a gradual trimming of the number of public-sector workers and state managers.

The measures also will reduce the network of small, state-owned companies, cut spending on automobiles by the public administration in half and centralize the state's purchases of goods and services.

(Reporting by Steve Scherer; Editing by Michael Roddy)

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