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MNI INTERVIEW: Italy's League Aims to Extend Flat Tax - Borghi

By Silvia Marchetti
     ROME(MNI) - Italy's right wing League party, which may get a run at power
if the country's governing coalition breaks, would include promises for a flat
tax for both employees and firms and regional fiscal autonomy in a
deficit-funded programme in the event of early elections, its chief economist
and the president of the lower house of parliament's budget committee told MNI.
     The last government, in which the League served as coalition partners to
the populist 5-Star Movement until it collapsed in August, established a 15%
flat tax for the self-employed earning less than EUR65,000 a year, but this time
the rate would be extended to "all tax payers", both individual and corporate,
as part of a major simplification of the taxation system which would eliminate
deductions and rebates, Claudio Borghi said in an interview.
     "This first flat tax was a successful move that simplifies taxation and
improves the lives of many workers by reducing their accountability burden. We
want to finish what we started, extend it to everyone and complete the tax
overhaul", said Borghi.
     While specifics of the proposed tax would be discussed at an upcoming party
Congress, they would be funded by a rise in Italy's fiscal deficit, he said.
     "That's the main reason why we fell apart with 5-Star: we wanted to cut
taxes by slightly raising the deficit target but they opposed it," Borghi said,
in an interview which took place as tension between 5-Star and its new coalition
partner, the centre-left Democrats, threatens to prompt early elections three
years ahead of time.
     The League, with around 30% in polls, looks set to emerge as the winner of
any election, probably at the head of a right-leaning coalition.
     Borghi said the League also plans to push through stricter justice rules,
cut red tape for infrastructure investment and boost fiscal autonomy, allowing
regions to withhold up to 90% of the taxes that now flow into central state
     Borghi has previously argued for Italy to leave the euro, but has softened
his stance. He continues to call for changes to Europe's Stability and Growth
Pact, in particular the rule limiting budget deficits to 3% of gross domestic
product, and calls proposed changes to the eurozone bailout fund, the European
Stability Mechanism, a "disaster" which must be stopped. Italian opposition to
the ESM reform, also shared by many members of 5-Star, has threatened to sink
the reform, which is key to remodelling the eurozone's financial architecture.
--MNI London Bureau; +44 203 865 3829; email:
[TOPICS: MFIBU$,M$E$$$,M$I$$$,M$X$$$,MC$$$$,MT$$$$,MX$$$$]

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