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Contentious tax still giving Letta headaches

Berlusconi threatening to pull govt support over IMU

10 May, 18:50
Contentious tax still giving Letta headaches (By Christopher Livesay) (ANSA) - Rome, May 10 - A decree suspending summer payments on the unpopular IMU homeowners' tax should be put forth in the middle of next week, government sources said following a summit with the whips of the parties supporting Enrico Letta's government. The government was expected to approve the decree in a cabinet meeting Thursday, but issued a statement instead saying it would happen "in the coming days". Ex-premier Silvio Berlusconi called Thursday's decision 'a nice victory but not enough'.

The center-right leader, whose People of Freedom (PdL) party occupies prominent seats in the fledgling left-right coalition government, made abolishing IMU and refunding taxpayers a central platform of his campaign ahead of February general elections.

He has threatened to pull his party's support and sink the government if it does not meet his demands.

Letta has agreed to "revising IMU" and suspending June payments in the meantime.

The decree scheduled to be launched next week will suspend IMU taxes from June to September, as well as slash them by half compared to 2012 payments, government sources said. The delay and discount applies only to the IMU on first homes, however, while tax on commercial real estate and holiday homes remain in place. Italian industrial employers' confederation Confindustria and the OECD have said reducing labour taxes to help fight record levels of unemployment should be a higher priority for Letta's government than scrapping IMU.

IMU was instituted among a series of austerity measures under former premier Mario Monti's emergency technocrat government to restore health to Italy's public finances drained by the euro crisis, which helped bring down Berlusconi's government at the end of 2011. Abolishing IMU and reimbursing the 2012 revenues from it would create a hole of around eight billion euros in this year's budget.

Nevertheless, the House whip from Berlusconi's PdL on Friday vowed that the tax will be scrapped. "It will be abolished," said Renato Brunetta exiting a summit with the whips from the parties that support Letta's government.

Brunetta, the former civil service minister under Berlusconi, said the PdL "had absolutely not ceased its call to refund IMU payments".