Italy’s Salvini Vows to Widen Flat Tax Plan for Small Companies

(Bloomberg) -- Italy’s Deputy Premier Matteo Salvini, who’s vowed to bring “Trump-like” tax cuts to jump start the economy, committed to expand the beneficiaries of a lower rate in a step to fulfill a key electoral pledge.

“If someone will tell us that we can’t do it, we’ll do it anyway,” Salvini said Friday at a Milan event, when asked whether the government will proceed with a plan to extend a 15% percent flat rate to companies with revenue of up to 100,000 euros ($113,170) starting from Jan. 1.

The 2019 budget law approved last December by the populist government introduced the flat rate for companies with income of as much as 65,000 euros. Salvini has used issues such as immigration and tax cuts to become the most popular politician in Italy and gain greater influence in the fractious governing coalition with the Five Star Movement.

Salvini said he favored bringing forward the approval of the 2020 budget legislation as soon as possible to avoid the “daily bickering” with Five Star and potential clashes with the European Union, which has recommended a debt infringement procedure against Italy. The government should do everything to avoid the procedure, but “not at all costs,” he said.

Prime Minister Giuseppe Conte also said Thursday the country won’t violate EU budget rules, and that Italy will be able to contain this year’s deficit to 2.1% of economic output, mostly because of one-off revenues.

Salvini estimated that the League’s flat-tax scheme next year would cost an additional amount between 10 billion euros and 15 billion euros. He made it clear that Italy won’t raise taxes to satisy EU demands and he was prepared to “say goodbye” and break up the coalition if the government doesn’t follow through with his tax overhaul plan.

--With assistance from Alessandro Speciale.

To contact the reporter on this story: Lorenzo Totaro in Rome at ltotaro@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Chiara Albanese, Dan Liefgreen

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