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Italy's 5-Star in favour of higher budget deficit for "flat tax" - M5S source

ROME, May 31 (Reuters) - Italy's 5-Star Movement are in favour of hiking next year's budget deficit to cover the cost of lowering the tax burden by introducing a single tax rate, a senior 5-Star source said on Friday.

The so-called "flat tax" has become the top priority for the right-wing League which a recent vote for the European parliament turned into Italy's strongest party, surpassing coalition partner the 5-Star Movement.

"The League's proposal to finance the flat-tax via a higher deficit finds us in agreement," the source said.

"Even more so if, as we are hearing, (Economy Minister Giovanni) Tria shares this idea: we welcome a regime with an income tax rate of 15 percent for people earning up to 65,000 euros (a year)." (Reporting by Giuseppe Fonte, writing by Valentina Za)