ROME: The Italian government got the final approval for the 2020 budget in the early hours of Tuesday, which will see the country avoid a planned VAT tax increase but does little to solve its economic problems.
The budget agreement is the result of difficult negotiations within the ruling coalition, an uneasy alliance between the populist Five Star Movement and the centre-left Democratic Party created in August.
The Chamber of Deputies backed the executive in a 334-232 vote on Monday, with four abstentions. The result was expected since the ruling coalition has a comfortable majority in the lower house.
In a second vote early Tuesday, lawmakers gave their final approval to the budget bill worth some 32 billion euros ($35 billion).
This was the final step necessary for the budget to come into force and passed with 312 yes votes, 153 no votes and two abstentions.
The main measure in the budget is to postpone VAT tax increases worth 23 billion euros. They were originally planned to take effect in 2020.
The budget also includes cuts in payroll tax, higher childcare subsidies, taxes on single-use plastic from July and sugary drinks from October, and a stronger commitment to fighting tax evasion.
With the budget, the government plans to keep the public deficit at 2.2 per cent of gross domestic product (GDP), debt at 135.2 per cent of GDP, and GDP growth at 0.6 per cent.
This means the situation next year will remain virtually unchanged compared to 2019, with slightly higher growth, the same deficit, and marginally lower debt, leaving the country in a less than rosy situation.
Italy, the euro zone’s third largest economy, has a public debt and low growth problem.
It is the only European Union country besides Greece whose GDP has not returned to pre-2008 financial crisis levels. — dpa
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