Italy Races Against Time on Budget as Tax on Charities Draws Ire

(Bloomberg) -- Italy’s populist government is racing to push its budget bill through Parliament, with a controversial tax increase for charities the latest hurdle to be cleared by the year-end deadline.

The measure is sparking criticism by the political opposition because it will double the tax rate for non-profit entities such as the Red Cross to 24 percent. The populist Five Star Movement is drawing the brunt of the attacks because it’s made the fight against poverty a key part of its program.

Given the Dec. 31 deadline to get the budget package approved in Parliament, Italian Deputy Prime Minister Luigi Di Maio, Five Star’s leader, said there’s not enough time to amend the tax proposal now, so “the norm will have to change at the first available opportunity" in January.

The lower house is expected to hold a final vote on the bill Saturday. If Italy misses the end-year deadline, it would have to use a special procedure in which public spending would revert back to this year’s budget.

A weeks-long tussle with the European Union over the planned deficit target, which was cut from 2.4 percent to 2.04 percent, has been blamed by Rome as one of the causes of the delay in getting the final version of the budget bill ready for legislators to vote on.

The budget drama appears to be hurting the popularity of Five Star and its coalition ally, the anti-immigration League. Support for the League dropped 3 percentage points to 32.9 percent over the last month, while backing for Five Star has fallen to 27 percent, according to an Ispos poll published by daily Corriere della Sera on Thursday.

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