Italy populists will only vote 'courageous' budget

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Rome (AFP)

The head of Italy's populists, Deputy Prime Minister Luigi Di Maio, warned Wednesday that his party will not vote for the 2019 budget if it is not "courageous" enough.

Di Maio, leader of the anti-establishment Five Star Movement (M5S) which governs with the far-right League, has repeatedly demanded the finance ministry find the funds for key electoral pledges, primarily a basic income for the unemployed.

The ministry is due to outline its 2019 public finance plans on Thursday.

"We trust (Finance Minister Giovanni) Tria, but the Italians know that at the heart of the ministry there are people appointed by the previous government who are rowing against us," Di Maio said on Radio Capital.

Italian media widely reported the deputy PM threatening 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 Wednesday, "but it goes without saying that the Five Star Movement will vote for a courageous budget".

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

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 per year.

EU fiscal rules set the threshold for the ratio of the public deficit to gross domestic product (GDP) at 3.0 percent, but Italy needs to come in well under that figure to reduce its mammoth public debt which stands 132 percent of GDP.

The previous government had forecast a ratio of 0.8 percent.

On Tuesday, Di Maio said if Paris could play fast and loose with EU fiscal rules, so could Rome: he pointed to France's public sector deficit, expected to rise to 2.8 percent of GDP next year. Was Italy not "a sovereign country just like France" he asked?