The Italian government does not “feel bound by the norms on public deficit decreed by Brussels” deputy prime minister Matteo Salvini said on Monday.
The leader of the anti-immigration Lega also noted that the EU’s deficit rules have at different times been ignored by France, Spain and Germany.
The release of the 2019 Italian budget was postponed from Monday to Tuesday. The delay had little to do with negotiations in Brussels. The two coalition partners were negotiating on a “tax amnesty” law, which would allow the government to claim extraordinary one-off revenue stream but giving the chance to businesses that have not declared income to come clean.
The Five Star movement is largely opposed to amnesties, as they undermine the credibility of the tax system. By Monday evening the two coalition partners finally agreed that the amnesty would be given to those owing the state no more than €100,000.
Meanwhile, there should be no surprise to the budget released by the Italian government for Brussels. Addressing the press in the evening, following the conclusion of the negotiations between the two coalition partners, Salvini affirmed every contested policy that will affect the budget. The recall of the2011 pension reforms (Fornero), tax relief for the self-employed, and a minimum guaranteed income are going ahead.“… We are continuing to keep our promises, gradually and bravely,” Salvini said.
Rome has already published the 2019 financial budget framework, aiming for a 2,4% of GDP deficit. That is below the EU’s 3% ceiling but three times bigger the fiscal target agreed with the previous government (0,8%) for 2019.
Rome wants to bolster spending and slush taxes, at the cost of €37bn. According to a Demopolis poll published on Friday, 52% of Italians are behind their governments’ 2019 budget, while 38% oppose it.
The European Commission has argued that if Italy does not reign over its deficit its debt-to-GDP ratio will increase. The Italian debt stands at 131% debt-to-GDP ratio, second only to Greece.
The government is striking a tone of defiance. Rome believes that only growth can allow Italy to reign over its debt.