The government sent its deficit trimming plan to the EU, which stipulates that between 2014 and 2015 regional governments plan to cut their spending by 8 billion euros. This will not bode well for politicians as they seek re-election in two years, because they will lose access to 4 billion euros each year and more than half of the cutbacks could result from reduced tax revenues.
This will be a difficult goal for a financing system that's sinking fast. Since the nation started to rebuild the economy, it has been searching for a way to radically improve ways of raising tax revenues.
The reality is that many years of hard work lie ahead because the regional governments have a high structural deficit and a lot of debt. Both will not go away with a few mere cutbacks. Reforms need to be carried out for the public sector, tax system and regional governments in order to balance the national budget.
