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Italy populists Five Star and League launch government pact

Italy populists Five Star and League launch government pact

Image copyright AFP
Image caption Populists poised to govern: M5S leader Luigi Di Maio (L) and Lega's Matteo Salvini

The two populist parties preparing to govern Italy have published a joint policy programme including tax cuts and a guaranteed basic income for the poor.

The anti-establishment Five Star Movement (M5S) and far-right League are now consulting their members on the coalition plan, but they have not yet nominated a prime minister.

The plan says poor families will get a €780 (£682; $919) basic monthly income. The minimum pension is also to be €780.

New "flat tax" rates are also planned.

The plan aims to reduce income tax rates to just two brackets, set at 15% and 20%.

Families would receive a €3,000 annual tax deduction based on household income.

The parties plan to abolish a pension reform that raises the retirement age in phases. The next rise is to 67 years, from 66 years and five months, on 1 January.

The 58-page joint pact, or "contract", does not explain how all the extra spending will be financed. If it is approved by the parties' members it will be presented to President Sergio Mattarella next week.

There is no mention of Italy withdrawing from the eurozone, though both parties are very critical of EU economic policy.

Read more on Italy's economic challenges:

The League is strongly anti-immigration and the joint plan demands more EU help for Italy, the main destination for migrants arriving from North Africa. It insists on relocation of migrants across the EU and on stepping up deportations of failed asylum seekers.

M5S leader Luigi Di Maio and League chief Matteo Salvini are expected to meet again at the weekend. The programme is the result of 70 days of intensive negotiations.

For the first time modern Italy is set to be governed by populists who reject EU economic austerity and aim to renegotiate Italy's huge debt repayments. Italy's public debt is currently 130% of national output (GDP), the second-highest in the EU, after Greece.

The plan calls for "public debt reduction not through revenue based on taxes and austerity – policies that have not achieved their goal – but rather through increased GDP by the revival of internal demand".

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