The European Central Bank, which has spent billions to buy Italian bonds to help Italy avoid default, has pressured the country sharply to adopt austerity measures to calm markets. But the steps are not sitting well with many Italian families who, according to a recent study by Stephen Jenkins of the London School of Economics and Andrea Bardolini of Italy's Central Bank, lost 3.3 percent of their disposable income between 2007 and 2009. (In Greece, which has the second-worst rate, families lost 1.3 percent during the same period.)
The widespread resentment against the government is bolstered by the fact that, until recently, Prime Minister Silvio Berlusconi touted his opposition to high taxation.
During his second term in 2004, he even declared at a press conference that he felt "morally authorized to evade taxes," as they were too high. At the time, the average citizen faced a 42 percent tax rate, one of the highest among developed nations.
But seven years later, during his third term, Mr. Berlusconi is raising taxes to 44.5 percent.
"I don't really understand how they can think to boost the economy by raising taxes," he says. "All I foresee is poor people becoming even poorer, and those who already evade taxes keeping doing so. Moreover, you don't need to be an expert to understand this will hurt consumption."