May 17, 2018 / 1:19 PM / 7 months ago

Economic proposals in draft government pact of Italy's 5-Star, League

ROME (Reuters) - Italy’s anti-establishment 5-Star Movement and far-right League are expected to approve on Thursday a policy program for their planned coalition government, 5-Star leader Luigi Di Maio said.

Reuters has seen a draft of the program dated May 16, before it was handed to the party leaders for their approval.

Following are highlights of the key economic segments.

An “*” before any item means it is marked in the document as still needing to be approved by the leaders and cannot be considered definitive. There is no guarantee the wording on the other items might also have been changed in the last 24 hours.

For highlights of foreign policy, defense, justice reform, immigration and other domestic issues, click on:

DEBT AND DEFICIT

- * The accord says the government’s spending plan will be financed by cutting waste, “debt management” and “an appropriate recourse to the deficit”

- Reduce debt by boosting growth, not by raising taxes or imposing austerity

- Seek a change in EU rules so that expenditure on public investments does not count in the budget deficit

- Says government bonds of all eurozone countries already purchased by the European Central Bank with the quantitative easing (QE) program should be excluded from debt/GDP ratios

- * Europe’s economic governance, including the Stability and Growth Pact and the fiscal compact, needs to be revised in cooperation with EU partners

- Europe should return to a “pre-Maastricht” position when countries were guided by a “genuine desire for peace, brotherhood, cooperation and solidarity”

- Makes no reference to revisions to Italy’s current deficit and debt targets

TAXES

- Next year’s scheduled sales and excise taxes increase, worth 12.5 bln euros, will be canceled. “Anachronistic” gasoline excise tax components also to be eliminated

- * Flat tax set at 15 pct for companies while income tax rates will be reduced to just two brackets set at 15 and 20 pct. Families to receive 3,000-euro annual tax deduction based on household income. No timing for this given

- Planned increase in sanctions for tax avoidance

- Offer amnesty to people struggling to pay tax arrears

PENSIONS

- Abolish the ‘Fornero’ pension reform which raised the retirement ages and required future hikes, with the next one — to 67 years from 66 years and 5 months — due on Jan. 1, 2019. The pact says 5 billion euros will be needed to cover the cost

- Introduce new points system allowing people to combine their age with the number of years they have paid social security contributions. This must equal 100, with the idea that those who have paid into the system for 41 years can retire once they are at least 59

- Pensioners should have monthly income of at least 780 euros

UNIVERSAL INCOME

- Ensure income of 780 euros a month for the poor by providing universal income support

- The pact envisages this will cost 17 billion euros a year

- It also calls for a 2 billion euro investment in employment agencies to better help job seekers

- Open dialogue with European Union to guarantee the use of 20 pct of the European Social Fund allocation to help Italy establish this universal, or citizens, income

BANKING

- Calls on the EU to “radically reform” its bail-in regime, to ensure greater protection for savers

- Tougher penalties for both bosses and regulators in cases of bank failures and possibility of compensation for retail shareholders of resolved banks

- Calls for a review of the Basel accords, saying parameters are seriously damaging small businesses in Italy

- Calls for state to remain a shareholder in bank Monte dei Paschi, recently bailed out by the government, and to prevent it from closing branches useful in serving the economy of the region

- Calls for a move towards separating investment banking from retail banking

- Plans to make it obligatory for banks to obtain court authorization before trying to recover money from debtors

LABOUR

- Introduce a minimum wage

- The pact calls for a reduction in labor costs/charges

- A re-introduction of voucher payments for workers

INDUSTRY, TRANSPORTATION

- Alitalia must not simply be saved, but also relaunched because the country needs a competitive national airline. League economic chief Claudio Borghi told Reuters that the program includes stopping the sale of Alitalia.

- * Suspend work on the high-speed rail line between Turin and Lyon

ILVA STEEL PLANT

- The pact says the health of citizens and the environment around the ILVA steel factory in Taranto needs protecting, calls for an economic “re-conversion” to promote industry in the south based on closing “sources of pollution”. The pact does not say if the whole ILVA site should be shuttered

GAMBLING

- Phase out slot machines, videolottery, adopt greater restrictions on gambling industry

Reporting by Crispian Balmer, Steve Scherer, Giuseppe Fonte and Gavin Jones; Editing by Hugh Lawson and Jon Boyle

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