Factbox: Key measures in Italy's deficit-hiking budget

ROME (Reuters) - The Italian Cabinet on Monday signed off on an expansionary 2019 budget, boosting welfare spending, cutting the retirement age and hiking the deficit to set up a showdown with authorities in Brussels over compliance with EU rules.

Following are some of the budget's key measures as explained by ministers and government officials. The package now passes to parliament where it must be approved by the end of the year.

* EARLIER RETIREMENT

The budget rolls back a 2011 pension reform which raised the retirement age for many Italians to around 67, with further increases scheduled to match rising life expectancy. The new system, which begins in February, allows people to retire when the sum of their age and years of work add up to 100. Hence someone who has worked for 38 years will be able to retire at 62.

The change will cost the state some 7 billion euros ($8.11 billion) in 2019.

* BASIC INCOME

Poor unemployed Italians and pensioners will be able to draw a maximum of 780 euros per month to get them out of poverty. That figure marks the ceiling for single people with no other income, while those living in a family will receive less. The benefit is dependent on people doing community work and looking for regular employment, and is withdrawn if the recipient declines three job offers that match his qualifications. It will launch by March and will cost some 10 billion euros next year.

* TAX AMNESTIES

The budget offers several schemes to allow people to settle tax disputes with the authorities by paying a limited sum. The amnesties are targeted to raise about 8 billion euros next year.

The main scheme involves people who have failed to declare up to 100,000 euros of earnings during the last five years, on which they will be able to pay a rate of 20 percent.

Those owing up to 1,000 euros due to fines or unpaid taxes stemming from before 2010 are "pardoned" with no penalties.

* TAX CUT FOR SELF-EMPLOYED

For the self-employed, the earnings threshold for the current bottom income tax rate of 15 percent is raised to 65,000 euros per year from 30,000 euros. The right-wing League, which champions the change, says it will affect around 500,000 people.

* CUT TO BANKS' TAX BENEFITS

The budget reduces to 86 percent the proportion of interest payments that banks can deduct from their taxable income, instead of 100 percent as is currently the case.

* CUT TO "GOLDEN PENSIONS"

Pensions above a net 4,500 euros per month which are not funded by contributions paid into the system will be cut to below the 4,500 euro threshold.

($1 = 0.8636 euros)

(Reporting by Giuseppe Fonte; writing by Gavin Jones; editing by Leslie Adler)