ROME (Reuters) – Deputy Italian Prime Minister Matteo Salvini will quit the government unless he can push through at least 10 billion euros (£8.9 billion) in tax cuts, a newspaper quoted him as saying on Friday.
Italy is negotiating a budget revision with Brussels to try to prevent an EU disciplinary procedure triggered by the country’s overly high debt.
Emboldened by his League party’s strong showing in European parliamentary and local elections, Salvini has made reducing Italy’s high tax burden a priority for the government.
“The problem is that there are no serious tax cuts that could be worth less than 10 billion euros,” Salvini told 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.”
The government, made up of a coalition of the right-wing League and the 5 Star Movement, is insisting on making tax cuts, which it says would help revive Italy’s feeble growth.
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 added.
Rome is counting on making savings of at least 3 billion euros this year to reduce the 2019 budget deficit from a current 2.4 percent target to 2.1-2.2 percent.
Government sources have told Reuters that the real sticking point in talks with the EU is about 2020.
Prime Minister Giuseppe Conte told an Italian daily it would become clear in coming days if the EU was also seeking commitments also on the 2020 budget.
The government has also promised to avoid a scheduled increase in value added tax from which 23 billion euros in additional revenues are expected next year.
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.”
The Commission expects Rome’s debt to rise further above the EU’s ceiling of 60% of economic output from about 132% at present.
(Reporting by Valentina Za; ; editing by John Stonestreet)