Left Menu
Development News Edition

UPDATE 2-Italy's Tria seeks to avoid VAT hikes without widening deficit

UPDATE 2-Italy's Tria seeks to avoid VAT hikes without widening deficit
Italy's government will consider measures that would enable it to avoid implementing an unpopular hike in value-added tax (VAT) next year without widening the budget deficit, Economy Minister Giovanni Tria said on Wednesday. Italy, whose public debt is proportionally the highest in the euro zone after that of Greece, is struggling to keep its finances in check while honouring the costly promises made by the populist ruling coalition.

Any sign the coalition is losing control of the public finances would be likely to increase the country's borrowing costs, which Tria said were "still too high". "We will evaluate alternative measures. Everything we do will have to confirm the compatibility of the budget objectives. This is very important," Tria told a parliamentary hearing when asked about the government's plans on VAT.

The government this month raised this year's deficit target to 2.4 percent of gross domestic product from a 2.04 percent goal set in December after a drawn-out tussle with the European Commission, giving it slightly more room for spending. Next year it targets a 2.1 percent deficit, but that factors in some 23 billion euros ($26 billion) of expected revenue from a sales tax hike that coalition leaders have vowed to avoid - without clarifying where else they will get the money from.

Without the VAT hikes, the deficit would widen to 3.4 percent of GDP and breach European Union budget rules, the Bank of Italy said on Tuesday, a warning that sent Italian bond yields higher. Benchmark 10-year Italian government bonds currently trade at a yield of around 2.6 percent, below a peak of 3.8 percent in October but above the sub-2 percent levels last seen before the government was formed last May.

"Government plans, the incisiveness of the reforms, and parliament guidelines on budget policy will be important" to reduce interest rates, Tria told the hearing on the government's 'DEF' multi-year planning document. He appeared to be calling for caution ahead of a parliamentary discussion on the DEF starting on Thursday, where the ruling parties may seek wider deficit goals.

After Tria spoke, the leaders of the ruling League and 5-Star Movement reiterated that they would not allow VAT to rise. Tria also said that the public debt, which is expected to increase this year to 132.6 percent of GDP from 132.2 percent in 2018, is fully sustainable even with slower economic growth.

Italy's economy showed encouraging developments in the first two months of this year, he said, adding that the government's forecast 0.2 percent growth rate implied a slight recovery in the first half, followed by a stronger pick-up. GDP fell 0.1 percent in the third and fourth quarters of last year, putting the euro zone's third largest economy into a technical recession. (Writing by Maria Pia Quaglia, Giuseppe Fonte and Gavin Jones, editing by John Stonestreet and Hugh Lawson)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

Download The Devdiscourse News App for Latest News.



Beware! Maximum cyber criminals eye your personal data

A report of the World Economic Forum revealed that cyber security is increasingly becoming an issue of public security as the majority of cyber criminals are increasingly targetting individual internet users. This requires preventive measur...

WEF 2020: Trump seems politically correct in pulling out from Paris Agreement

If the survey of the World Economic Forum WEF is believed, Trump seems to enjoy the confidence of his people in flaying climate intuitions and climate activists. His preference for economic development over environmental protection not only...

From home to healthcare, here are Robotic innovations transforming lives

Lovot is equipped with more than 50 sensors such as thermography, microphone array, obstacle detection, and touch sensor to generate motion and emotions in real-time....

Translating words to deeds: Achieving gender parity in access to financial resources

... ...


Latest News

Postal Dept to provide several civic services to people of UP from April 1

Several civic services including birth and death certificates, Aadhaar enrolment and udpation, and bus and flight ticketing would be provided by the Postal Department in Uttar Pradesh from April 1, with a special portal being set up for the...

Cricket-Philander fined for swearing at England batsman

South African paceman Vernon Philander became the fourth cricketer to be fined and given a demerit point in the series against England when the International Cricket Council ICC announced a sanction for swearing on Sunday.Philander, playing...

Bharti Realty ties up with Asthetic Township to build commercial project in Gurugram at Rs 350 cr

Bharti Realty, the real estate arm of Bharti Enterprises, has tied up with Asthetic Township Developers to build a new commercial project in Gurugram at an estimated construction cost of Rs 350 crore. Asthetic Township Developers Pvt Ltd ow...

Oman's foreign minister meets Iran's foreign minister Zarif - Tweet

Omans Minister of State for Foreign Affairs Yousuf bin Alawi bin Abdullah will meet Irans Foreign Ninister Javad Zarif in Tehran on Sunday to discuss maritime security in the Hormuz strait, Omans foreign ministry tweeted. Oman maintains fri...

Give Feedback