ROME Italy's government won a parliamentary confidence vote on a mini-budget on Thursday, agreeing to 3.4 billion euros ($3.80 billion) of deficit-cutting measures to placate the European Commission.
The package includes an increase in levies on tobacco and gambling, a renewed crackdown on tax evasion and efforts to boost the tax take from Internet companies.
The commission had threatened to launch disciplinary action against Prime Minister Paolo Gentiloni's centre-left government if it did not adopt previously promised deficit reductions.
The upper house Senate approved the bill by 144 votes to 104. It has already been given a green light by the lower house.
As a result of the new measures, the budget deficit target for this year is 2.1 percent of gross domestic product, against 2.4 percent registered in 2016.
Italy, which has the highest public debt in the euro zone after Greece, originally pledged to cut the deficit to 1.8 percent of GDP and angered Brussels when it approved last December a budget that hiked the deficit goal to 2.3 percent.
The 2.1 percent target was seen as a compromise, with Italy saying it needed extra leeway to help it pay for reconstruction efforts after earthquakes in the centre of the country and to cover the cost of the migrant influx from Africa.
The bulk of the additional savings approved on Thursday come from changing the rules governing payment of value-added tax, which the government says will reduce evasion.
All public bodies will from now on pay value-added tax directly to the Treasury when they buy goods and services, instead of paying it to the supplier.
The bill also introduces two voucher systems to pay workers, months after the government bowed to pressure from labour unions to scrap a similar scheme.
Companies with five employees or fewer, excluding building firms, will be able to pay wages in vouchers worth 9 euros each. A company can pay no more than 5,000 euros in vouchers each year, with a maximum of 2,500 euros per worker.
In a bid to reconcile ongoing tax disputes with Internet companies, the mini-budget offers them the chance to fix their tax bills in advance.
Levies on slot machines will also be raised, and the bill stipulates that more than 100,000 machines - around 35 percent of the current total - must be scrapped by early 2018.
Short-term rentals like those arranged through online marketplace AirBnB will now incur a 21 percent tax rate.
(Reporting by Crispian Balmer; Editing by Janet Lawrence)