Italy's Lower House Approves EUR20 Billion 2018 Budget

By FeaturesDow Jones Newswires

Italy's lower house has approved the 2018 budget, dispatching the chamber's last major piece of legislation and paving the way for the dissolution of parliament as soon as next week.

With an eye to elections next year, lawmakers approved a budget Friday that largely avoids painful measures and seeks to extend an economic expansion that is the strongest the country has seen since 2011.

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Once Italy's Senate approves the budget, Italian President Sergio Mattarella is expected to dissolve parliament and call new elections, which must then take place within 70 days. A vote in early March is widely expected.

The exact timing of the senate vote on the budget isn't clear, but is likely to be in the coming days. The budget must be approved by year-end.

The 20 billion-euro budget is focused on revenue-raising measures aimed at averting a series of automatic increases in value-added taxes that would kick in next year to keep Italy's deficit under control. It also establishes a tax aimed at collecting more levies from companies such as Amazon and Facebook.

The ruling Democratic Party, which is now slipping badly in the polls, is keen to go into elections with an economy that continues to grow. Italy is expected to have grown by 1.5% in 2017, its fastest pace since 2011.

The budget includes incentives for companies that spend on machinery or other capital improvements. It also introduces measures to address Italy's growing poverty levels--a problem that is fueling support for populist parties. More than 4.7 million Italians live in absolute poverty, nearly double the number a decade ago, according to Italian statistical agency Istat.

The budget includes a three-year reduction in social security contributions for companies that hire young people on long-term contracts, a measure aimed at bringing down Italy's 35% youth unemployment rate.

Another key measure will force companies to pay a 3% tax on specific web services in Italy, which is aimed at extracting more taxes from Internet behemoths such as Amazon, Apple and Google. Those companies avoid much of Italian taxes by claiming they do not have a stable presence in Italy, a strategy that has stirred anger among policymakers across Europe.

Write to Giovanni Legorano at giovanni.legorano@wsj.com

(END) Dow Jones Newswires

December 22, 2017 08:22 ET (13:22 GMT)