October 2, 2018 / 3:31 PM / 16 days ago

Italy's League pushes tax break plan for sovereign bond purchases

ROME, Oct 2 (Reuters) - Lawmakers are pushing Italy’s ruling coalition to approve a scheme offering tax breaks to citizens who buy government debt.

The measure, put forward by members of the right-wing League party, is aimed at helping the two-party coalition - which includes the League - find extra resources to finance costly measures it promised during campaigning for national elections in March.

Italy’s debt already stands above 130 percent of the country’s gross domestic product, the highest in the euro zone after Greece, and its ambitious budget plans have spooked markets and set it on a collision course with EU authorities and its euro zone partners.

Armando Siri, Undersecretary for the Infrastructure Ministry and League lawmaker, told Reuters the scheme envisaged up to 15 billion euros in investments in Treasury bonds and, if approved in cabinet, would be included in a decree to be presented by Oct. 20 alongside the 2019 budget.

Italian families and businesses hold less than 5 percent of the country’s 2.3 trillion euro public debt, the bulk of which is in the hands of banks and investment funds.

Another significant investor is the European Central Bank, which is due to end purchase of Italian and other euro zone sovereign debt under its stimulus programme at the end of this year.

The finance ministry has expressed doubt over the legality of a savings measure that would exclude European Union citizens, a source close to the matter told Reuters.

Siri said that the no EU rules would be breached since the state would issued dedicated bonds for the new plan, adding there would be a 3,000 euro ($3,470) per capita investment cap.

$1 = 0.8654 euros Reporting by Giuseppe Fonte, writing by Giselda Vagnoni; editing by John Stonestreet

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