Protests as Italy's parliament passes Renzi's tax-cutting budget
By Gavin Jones
ROME (Reuters) - Italy's parliament has definitively approved Prime Minister Matteo Renzi's tax-cutting 2015 budget which aims to pull the economy out of recession while keeping the fiscal deficit inside European Union limits.
The lower house Chamber of Deputies approved the budget by 307 votes to 116 late on Monday night after 15 members of the anti-establishment 5-Star Movement, waving placards with anti-government slogans, were expelled from the chamber for shouting and occupying the benches reserved for the government.
The 5-Star Movement was objecting to an increase in value-added tax on environmentally-friendly fuels and to measures in favour of the slot machine industry.
The budget was passed by the upper house Senate last week.
It includes a hand-out for low earners of up to 80 euros (63 pounds) per month, worth almost 10 billion euros, and a cut in labour taxes for businesses.
The budget aims to lower the deficit to 2.6 percent of gross domestic product, below the EU's 3 percent ceiling and down from this year's 3.0 percent target.
However the European Commission says the package does not do enough to curb Italy's public debt of more than 130 percent of GDP, the highest in the euro zone after Greece.
Renzi has already been forced to ditch some tax cuts in his original budget draft to meet Commission demands that Italy do more to reduce its "structural" fiscal deficit, which is adjusted for swings in the business cycle.
Further belt-tightening measures may yet be needed. The Commission has said Italy, France and Belgium risk breaching its rules on running sound public finances and it will issue a final verdict on the budgets of all three countries in March.
A Commission technical document seen by Reuters last month said Italy needed new deficit cuts of up to 4.8 billion euros because extra measures proposed by Renzi, such as cracking down on tax evasion, do not seem effective.
Relations between Renzi and the Commission have often been tense. The 39 year-old former Florence mayor wants more leeway to increase spending but has struggled to produce the deep reforms which might persuade the Commission to grant budget flexibility.
He has made modest changes to the justice system and the civil service, but economists say much more is needed to revive an economy which has not posted a single quarter of growth for three years and has contracted by 9 percent since 2008.
He is currently drawing up a fiercely-contested reform of the labour market which will ease firing restrictions for large firms, and promises a sweeping overhaul of the education system.
(Additional reporting by Philip Pullella; Editing by John Stonestreet/Ruth Pitchford)
