December 20, 2018 / 10:59 AM / in a month

FACTBOX-Italy's revised budget: numbers and measures

    ROME, Dec 20 (Reuters) - Italy reached a deal with the
European Commission over its 2019 budget on Wednesday, cutting
its previous deficit target to avoid an EU disciplinary
procedure.                          
    The government also lowered its deficit targets and economic
growth forecasts up to 2021.
    Following are the main changes to the budget which must be
passed by parliament before the end of this year.
        
    DEFICIT REVISIONS
    * 2019 deficit/GDP target cut to 2.04 pct from 2.4 pct
    * 2020 deficit/GDP target cut to 1.8 pct from 2.1 pct
    * 2021 deficit/GDP target cut to 1.5 pct from 1.8 pct
    
    GDP REVISIONS 
    * 2018 GDP growth forecast cut to 1.0 pct from 1.2 pct
    * 2019 GDP growth forecast cut to 1.0 pct from 1.5 pct
    * 2020 GDP growth forecast cut to 1.1 pct from 1.6 pct
    * 2021 GDP growth forecast cut to 1.0 pct from 1.4 pct 
        
    DEBT ESTIMATES
    * 131.7 percent of GDP in 2018
    * 130.7 percent of GDP in 2019
    * 129.2 percent of GDP in 2020
    * 128.2 percent of GDP in 2021
    
    HOW THE NEW TARGET WILL BE MET
    Prime Minister Giuseppe Conte said Italy had agreed to find
10.25 billion euros ($11.70 billion) of savings and additional
revenue to meet its new 2019 deficit target. The amount will
rise to 12.42 billion euros in 2020 and almost 16 billion in
2021. 
    
    According to an Economy Ministry here
 document, a large part of the savings next year will come from
delayed implementation of the budget's flagship policies: an
income support scheme known as the citizens' wage and an early
retirement option. These will yield joint savings of 4.6 billion
euros, 2.7 billion from the pension reform and 1.9 billion from
the citizens' wage.
    
    Other funds in 2019 will come from:
    * Cutting the highest state pensions: 76 million euros  
    * Blocking inflation-linked increases to pensions: 253
million 
    * Selling state-owned real estate: 950 million
    * A new tax on multinational internet companies: 150 million
    * Higher taxes on gambling: 450 million 
    
    European Commission Vice President Valdis Dombrovskis said
Italy had also agreed to cut planned public investment but both
Deputy Prime Ministers, Matteo Salvini and Luigi Di Maio, denied
government investments would fall over the three years.   
        
    SAFEGUARD CLAUSES 
    To meet its deficit targets in 2020 and 2021, the government
promised to raise value-added tax (VAT) or find other means. If
the alternative measures are not found, VAT revenue must be
increased by 23.1 billion euros in 2020 and 28.8 billion in
2021. 
    Di Maio said on Thursday that VAT would not be increased
next year, "nor in the following years".
        
    MAIN BUDGET MEASURES
    * CITIZENS' WAGE 
Poor unemployed Italians and pensioners will be able to draw a
maximum of 780 euros per month to get them out of poverty. That
figure marks the ceiling for single people with no other income,
while those living in a family will receive less. The benefit is
dependent on people doing community work and looking for regular
employment, and is withdrawn if recipients decline three job
offers that match their qualifications. 
    The citizens' wage will be launched in April instead of from
January, with 7.1 billion euros allocated in the budget for it.
    The government has said the agreement with Brussels will not
change the number of people benefiting from the basic income.   
 
    
    * EARLIER RETIREMENT
The budget rolls back a 2011 pension reform which raised the
retirement age for many Italians to around 67, with further
increases scheduled to match rising life expectancy. The new
system allows people to retire when the sum of their age and
years of work add up to 100. Hence someone who has worked for 38
years will be able to retire at 62. It will also be launched in
April, instead of January, and has been allocated 4 billion
euros.
    
    * TAX CUT FOR SELF-EMPLOYED
For the self-employed, the earnings threshold for the current
lowest income tax rate of 15 percent is raised to 65,000 euros
per year from 30,000 euros. The right-wing League, which
champions the change, says it will affect around 500,000 people.
       

($1 = 0.8752 euros)

 (Reporting by Gavin Jones and Giuseppe Fonte; Editing by Angus
MacSwan and David Stamp)
  
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