Italian cabinet passes 26.5-bln-euro budget blueprint for 2017

Italian Prime Minister Matteo Renzi's cabinet passed the 2017 budget blueprint on Saturday, containing measures to boost the country's weak growth.

Overall, the package was worth 26.5 billion euros (29.2 billion U.S. dollars). The cabinet said much of the bill includes measures to boost economic competitiveness.

"The budget structure comprises six chapters, and the most relevant of them is competitiveness, to which we have allocated some 20 billion euros over a multi-year period," Renzi told a press conference after the cabinet's meeting.

The blueprint provided a reduction of corporate tax from 27.5 percent to 24 percent, as already announced by Economy Minister Pier Carlo Padoan earlier this month.

A personal income tax on agricultural firms was scrapped, and the social security contributions from self-employed workers were reduced. Tax breaks for companies willing to hire new employees were confirmed, but were less compared to the previous two years. The budget also contained incentives for companies investing in machinery and innovative technologies.

A new, simplified tax system was introduced for small entrepreneurs and artisans, as a way to encourage them to reinvest their profits in their own business, the prime minister explained.

The cabinet also avoided an increase in the sales tax for 2017, which would have provided an increase of some 15 billion euros in state revenue.

According to the blueprint, Italy's public investments would increase by 12 billion euros from 2017 to 2019, and one billion euros would be invested in a guaranteed fund supporting small and medium-sized enterprises.

The public sector and pensions were also included in the budget. "Some 1.9 billion euros will be allocated to renewing public contracts, hiring new staff, and reorganizing the army," Renzi said.

The budget blueprint also contained provisions necessary to allow some categories of workers retire earlier than a 2012 pension reform would have allowed. Measures to sustain low-income pensioners were also approved.

The cabinet raised its budget deficit forecast to 2.3 percent of gross domestic product in 2017, from a previous 2 percent, and left its growth forecast at one percent.

According to the prime minister, exceptional spending for the migrant crisis would amount to 0.2 percent of Italy's GDP next year. Italian municipalities that opened their doors to migrants and refugees in 2016 will be granted a single 500-euro contribution for each person hosted. Such spending would not be taken into account when calculating whether Italy respects the European Union rules on deficits and debt. Endi