Italy Deputy Prime Minister Luigi Di Maio's 5-Star Movement will support national coalition partner League's flat tax proposal, which would increase Italy's budget deficit, Bloomberg News reported, citing a person familiar with the situation.
This comes a day after League's party chief Matteo Salvini said he was willing to end his alliance with the 5-Star Movement if his national coalition partner opposed his proposed fiscal measures.
The government has not prepared the flat tax draft yet, Ansa news agency quoted Italian Prime Minister Giuseppe Conte as saying.
Separately, Di Maio secured the support of 80% of his party activists in a confidence vote conducted online May 30, Bloomberg News reported. 5-Star saw its support dwindle as it came in third in the European parliamentary elections, forcing its leader to call the party confidence vote.
Di Maio had accused Salvini of being "irresponsible" over the latter's comments indicating his willingness to breach EU fiscal protocols.
The European Commission had sent a letter to the Italian government warning it of excessive debt levels, setting the stage for a potential standoff between Rome and the EU. Italy has to respond to the EU by the end of May 31.