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Italy to push for both tax cuts and basic income in next annual budget

By Alexander Bueso

Date: Thursday 05 Jul 2018

Italy to push for both tax cuts and basic income in next annual budget

(Sharecast News) - Italy's new government will push ahead with both tax cuts and a universal basic income in its first budget, the country's finance chief said, even as he moved to assuage concerns that Rome might breach its budget targets.
Speaking with Bloomberg TV, the newly-minted finance minister, Giovanni Tria, said the new coalition government wanted to show it was not backing down on its electoral pledges.

"[Both measures] need to go hand in hand as they are necessary in order to change the system and to support economic growth," he reportedly said.

"Such a path will require us to act on the composition of both tax revenues and expenditure -- our discontinuity with the previous governments won't be about the deficit level, but rather about the policy mix," he added.

According to Tria, the new government would respect already agreed targets for the public deficit and national debt - as a proportion of gross domestic product - of 1.6% and 130.8%, respectively.

However, the public deficit target for the following year "might be" higher than the 0.9% that the previous administration had penciled-in.

When queried about the risk that analysts might respond by downgrading their rating on the country's sovereign debt, Tria said third party research, as well as its own, showed it would not be justified.

Slower growth in Italy and in the rest of Europe may see Rome ratchet down the pace of budget consolidation, he said, but in order to allow for greater investment, not increased current spending.

Brussels may also need to reconsider if certain types of investment should not be left out when calculating countries' public deficits.

Tria was also critical of some of the shortcomings in the single currency bloc's architecture, saying: "nobody wants to leave the euro, but if we don't fix it, things risk getting worse."

As of 1328 BST, the yield on the benchmark 10-year Italian government note was up by three basis points to 2.68%, versus an average level of 1.9% over the first four months of the year.

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