The coalition included the amnesty among measures to fund costly electoral promises which are set to sharply lift the budget deficit to 2.4% of domestic output next year, flouting European Union rules that require steady progress towards a balanced budget.
But the far-right League and the anti-establishment 5-Star Movement (M5S), the two parties in the coalition, have fallen out over a widening of the amnesty to shield financial criminals, including money launderers.
M5S Luigi Di Maio has accused the League of tricking its coalition partner by surreptitiously broadening the scope of the amnesty in the final draft of the 2019 budget.
In a blunt video posted on Facebook, League leader and Deputy Prime Minister Matteo Salvini said that Di Maio and Prime Minister Giuseppe Conte were both present at a meeting when the amnesty was fully outlined.
“I am beginning to get cross because at that cabinet meeting, Conte read (the text) and Di Maio wrote (the minutes),” Salvini said.
He nonetheless added: “I couldn’t give a stuff about this amnesty.”
Conte’s office denied Salvini’s account, while Di Maio took to Facebook to hit back, saying: “I do not want to pass for a liar, and I am not even going to let people say I was distracted.”
Salvini held out an olive branch to his coalition partners on Friday by saying that he was ready to change contested parts of the amnesty.
Speaking yesterday before flying to Rome for a coalition meeting, Salvini said that he would not “call into the question the government over a tiny piece of legislation which the M5S have changed their mind about”.
Di Maio welcomed Salvini’s decision and said the League was “a found-again friend”.
The coalition meeting between Di Maio, Salvini and Prime Minister Conte will be followed by a cabinet meeting over the tax measures included in the 2019 budget.
Conte ruled out a government crisis in an interview with Il Fatto Quotidiano daily newspaper yesterday.
The M5S has opposed tax amnesties in the past but the League, which has a traditional voter base of self-employed businessmen, had pushed for the measure.
Italy, which suffers from high tax evasion, has often resorted to tax amnesties to raise money.
The main scheme involved people who have failed to declare up to €100,000 of earnings during the last five years, on which they will be able to pay a rate of 20%.
The spat broke out when it emerged that in the final draft to be sent to parliament, the €100,000 referred to each of a series of taxes evaded, including in hidden, overseas accounts, rather than to the overall total.
M5S said that this was unacceptable and it had been tricked.
The government’s free-spending plans have led to a clash with EU authorities and prompted a downgrade by Moody’s which on Friday lowered Italy’s sovereign rating to one notch above junk status.
