MNI EXCLUSIVE: Court Reform Tensions Threaten Italy Tax Delay

By Silvia Marchetti

     ROME(MNI) - A dispute within Italy's already strained coalition over a

reform of the country's inefficient courts could delay key economic legislation,

including an overhaul of the tax system which would reduce payments for lower

earners and companies and could be pushed back by months, party sources told

MNI.

     The small Italia Viva party founded by former Italian premier Matteo Renzi

will vote with the opposition Forza Italia to scuttle legislation aimed at

cutting the length of trials and promoted by the 5-Star Movement, the sources

said.

     A top Italia Viva source told MNI the party wants to keep the coalition

alive but will vote against the "preposterous" justice reform, which would limit

access to the statute of limitations, reducing the incentive for defence lawyers

to draw out proceedings in a country where trials last eight years on average.

     While Italia Viva remains open to a compromise on the bill, with the

Democrats willing to mediate with 5-Star, the dispute is likely to take time

away from other initiatives such as the tax reform, producing delays of two

months or more, a Democrats source said. The government has yet to finalise

details of the tax reform, but says it would be a broader initiative than the

EUR3 billion in cuts included in the 2020 budget, reducing payments for all

contributors.

     --5-STAR WEAKNESS

     "If we face this justice hassle, that leaves us little time to discuss the

priorities of this other key taxation overhaul and where we ought to focus to

make the tax cuts more effective," said the Democrat source.

     The dispute comes as the populist 5-Star, the largest partner in the

coalition formed in September which also groups the centre-left Democrats, has

sunk in opinion polls, leading to a bad defeat in local elections in Emilia

Romagna, and has suffered a rash of defections in Congress. Scenting

opportunity, both Italia Viva and the Democrats are pushing their own policy

initiatives with an eye to the 2023 elections, while remaining wary of

triggering elections, which could usher in a government led by the far-right

League.

     Lacking an upper house majority formed by 5-Star and the Democrats alone,

the coalition will need the vote of at least 11 out of Italia Viva's 16 senators

to pass the justice reform. Renzi's party will by the end of February present

proposals for watering down the 5-Star initiative, including a possible

suspension of the measure for one year.

     "We do not want to trigger a political crisis nor make this government

collapse, but between saving our coalition and killing the right to an equal,

balanced trial, we choose a fair justice so yes, we'll block this preposterous

reform", said a top Italia Viva official.

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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