Italian laundry list grows amid political crisis

Bloomberg

Italy’s next government — whoever winds up leading it — will have a lengthy list of problems needing immediate attention.
Thorny issues include getting a budget that complies with European Union deficit rules through parliament by the end of December, finding a solution to the environmental pollution charges threatening thousands of jobs at Europe’s largest steel plant and working out who will run some of the biggest state-owned enterprises and key government agencies.
Drafting next year’s finance plan is going to absorb most of the attention of the new administration, which will have to balance the need to avoid a politically damaging sales-tax
increase — introduced by a previous government — with EU pressure to keep the deficit within the bloc’s constraints.
Sales tax will automatically rise on January 1 from 22 percent to just over 25 percent unless an additional 20 billion euros can be found to prevent the measure taking effect. Meanwhile, Salvini has said that he is working on a package of tax cuts and investment measures worth $55 billion that he promised will be approved “in 24 hours” if he is elected. Analysts expect a Five Star-Democrat coalition to be more market friendly and avoid another showdown with the EU. The deadline to present the budget to the bloc for approval is in mid-October.
Five Star leader Luigi Di Maio has been working for months on a plan to find a buyer for troubled airline Alitalia. State-owned railway Ferrovie dello Stato SpA is currently in talks with the Benetton’s family industrial arm Atlantia SpA , the finance ministry and Delta Air Lines Inc to come up with a viable business plan for Italy’s flagship carrier. After ArcelorMittal stepped in to buy the colossal Ilva steel plant in southern Italy, the future of the business depends on a fragile agreement between the world’s biggest steelmaker and the
government over immunity from environmental pollution charges. Early next year, the government will have to make politically sensitive appointments of new management at most of the biggest state-owned companies, including Eni SpA, Enel SpA and Leonardo SpA.
This typically involves delicate and lengthy negotiations between government officials and the companies’ largest shareholders.