Italy to include basic income plan in 2019 budget

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Italy will include a basic income for the unemployed and low-wage workers as well as a lower retirement age when it announces its draft budget for 2019, its economy minister has confirmed.

The Five Star-League coalition plans to present its first budget targets on Thursday afternoon local time, ending a drawn-out tussle which has pitted the governing parties against economy minister Giovanni Tria.

Tria told a retail association conference on Wednesday that the so-called "citizens' income" would help manage the social consequences of technological change, and said allowing people to retire earlier would give firms a younger, more skilled workforce.

The parties have been pushing Tria, an academic not affiliated to either party, to ramp up the fiscal deficit to finance their promises of tax cuts and higher welfare spending.

Italian deputy PM Luigi Di Maio speaks at the Italian Business Association Confcommercio meeting in Rome, Italy, June 7, 2018. /VCG Photo

Deputy PM Luigi Di Maio, leader of the anti-establishment Five Star which governs with the far-right League, warned on Wednesday that his party will not vote for the 2019 budget if it is not "courageous" enough.

Di Maio has repeatedly demanded the finance ministry to find the funds for key electoral pledges, primarily a basic income for the unemployed.

The basic income of 780 euros (919 US dollars) for the unemployed and those living on low wages comes with a hefty price tag – 10 billion euros (11.7 billion US dollars) at its most modest estimate and would weigh heavily on the public purse.

Italian media widely reported that the deputy PM threatened at a meeting late Tuesday to throw a spanner in the works if the money is not found for the basic income.

"It's not a threat," he clarified on Wednesday, "but it goes without saying that the Five Star Movement will vote for a courageous budget."

Italian PM Giuseppe Conte (C) is flanked by interior minister Matteo Salvini (R) and minister for labor and industry Luigi Di Maio (L) in Genoa, Italy, August 15, 2018. /VCG Photo

The League wants for its part to introduce a "flat tax" of 15 to 20 percent for companies and individuals, which is estimated would reduce tax revenues by 80 billion euros (93.9 billion US dollars) per year.

EU fiscal rules set the threshold for the ratio of the public deficit to gross domestic product at three percent, but Italy needs to come in well under that figure to reduce its mammoth public debt which stands at 132 percent of GDP.

Tria has softened an initial insistence the deficit should not exceed 1.6 percent of GDP and is now willing to accept a ratio of around 1.9 percent, government sources have told Reuters. The previous government had forecast a ratio of 0.8 percent.

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Source(s): AFP ,Reuters