0524 GMT August 24, 2019
Italy is negotiating a budget revision with Brussels to try to prevent an EU disciplinary procedure. The European Commission expects Rome’s debt to rise further above the EU’s ceiling of 60% of economic output from about 132% at present, Reuters reported.
Emboldened by his League party’s strong showing in European parliamentary and local elections, Salvini has made reducing a high tax burden a priority for the government.
The polls have reversed the balance of power within the ruling coalition made up of the League and the anti-establishment Five Star Movement, which holds a majority of parliamentary seats and cabinet ministers.
With the League votes doubled since the 2018 parliamentary election, Salvini has been acting as de facto prime minister, fueling concerns among the Five Star he could push for an early election.
He has said repeatedly that the government would last its full mandate as long as it was able to push through key measures, starting with tax cuts.
“There are no serious tax cuts that could be worth less than 10 billion euros,” Salvini told the Corriere della Sera daily.
“Italy needs a bold tax reform. It’s my duty to see it through ... if they won’t let me do that, I’m going to say goodbye and leave.”
Salvini said tax cuts were the only way to revive feeble economic growth.
The Five Star undersecretary Stefano Buffagni on Friday said tax cuts were “fundamental but one has to do them for real not in newspapers.”
Italy faces difficult choices over its 2020 budget which government sources have said is the sticking point in negotiations with Brussels.
The government has promised to avoid a scheduled increase in value added tax from which 23 billion euros in additional revenues are expected next year.
Salvini said he was happy to use any budget savings in 2019 to cut this year’s state deficit. “But enough with straitjackets in future years, enough with strangling growth,” he said.
Rome is counting on making savings of at least 3 billion euros this year to reduce the 2019 budget deficit from a 2.4% target to 2.1-2.2%.
Prime Minister Giuseppe Conte told an Italian daily it would become clear in coming days if the EU was also seeking commitments on the 2020 budget.
Conte challenged the European Commission’s forecasts and expressed confidence Italy would be able to avoid disciplinary action.
“Rules must be respected but I’m challenging their growth estimates because I’ve got the numbers. The budget update (that the government will present on Wednesday) contains those numbers,” he told Il Messaggero.
“As for rules, there is a political dimension to them and I want to be able to discuss such rules ... I never thought they could launch a (disciplinary) procedure and I still believe that.”