Martedì, 18 Settembre 2018

IMU, VAT lurk on govt horizon


(By Denis Greenan).
Rome, July 8 - The twin issues of averting a VAT
hike and scrapping an unpopular property tax called IMU
continued to lurk on the horizon of Italy's unprecedented
left-right government Monday.
Economy Minister Fabrizio Saccomanni said the government
would be "hard-pressed" to find the money to cover both moves,
sparking the ire of the People of Freedom (PdL) Party of
ex-premier Silvio Berlusconi, who swept to second place in
February's general election after promising to get rid of IMU
and repay last year's take.
Amid calls for Saccomanni's head, Premier Enrico Letta of
the centre-left Democratic Party came out vigorously in his
defence, saying: "Saccomanni is untouchable".
Over the weekend there was intense media speculation that
the government would now seek to fund the two measures by a mass
sell-off of State holdings, especially lucrative but
non-essential real estate, a move that has been repeatedly
mooted in the past.
But there was no confirmation of this Monday.
Pundits said concrete details about how the government aims
to fund the measures might come out of a government summit
While the avoidance of a 1% hike in the top rate of VAT
from 21% to 22% is relatively uncontroversial, IMU is a hot
potato that is affecting the shaky stability of Letta's
administration, cobbled together from traditional foes to end
two months of post-election stalemate.
PdL heavyweights have repeatedly threatened to bring the
government down unless it is abolished.
So far Letta has only put off a June instalment but has
promised to "supersede" the tax.
This has been taken to mean it will be lifted on most first
homes - the media have said some 80% of primary residences - so
that the worse-off and even the middle class will no longer have
to pay what is seen as an unfair levy that strikes at a
cherished and hard-won bulwark of Italians' diminishing
prosperity amid the country's worst recession in more than 20
This would leave the owners of large property portfolios to
be targeted, possibly by a tax with a different name.
It remains to be seen whether this will be enough to
placate the PdL, many of whose core voters have more than one
home, and whether the government will be forced by Berlusconi's
plug-pulling threat to refund the 2013 IMU proceeds as well,
stretching a budget that must meet the 3%-to-GDP EU-mandated
deficit ratio despite recent concessions for some pump-priming
On Monday Industry Minister Flavio Zanonato reiterated the
government's pledges to avert the rise in VAT and cut IMU on
Italians' first homes and industrial and commercial facilities,
including factories, warehouses, farms, supermarkets and shops.
Zanonato said cutting IMU would help give the economy "a
much needed shot in the arm".
He did not say how the move would be funded or whether last
year's IMU revenue would be returned to taxpayers.
Labour Minister Enrico Giovannini said both issues, as well
as a long-awaited reduction in labour taxes to help try to get
the economy going again, were "topics that should be left for
the 2014 Stability Law," or next year's budget which is
traditionally drafted in the autumn.
A leading figure in the PdL, meanwhile, played down the
long-running row and reiterated the centre right's view that
eliminating both IMU and the VAT hike would be a "drop in the
ocean" compared to the annual government budget.
Daniele Capezzone, long-time PdL spokesman and now chair of
the Lower House finance committee, said the moves would be
"simple and cheap".
"Simple things exist, even in the complexity and confusion
of the current political phase.
"There are two commitments that would do good for this
country, that will do good to the Italian economy, that will
benefit the popularity of this government and that, last but not
least, cost relatively little," he said.
"It has to do with the total abolition of IMU on the first
home and on agriculture, and sterilizing the VAT increase.
"Together, for 2013, they cost six billion euros, and that
is, compared to 800 billion euros in annual national public
spending, barely 0.75%, or a 1/133 fraction of the mountain of
(total) public spending.
"Is it possible that we are not capable of cutting public
spending (by an amount) corresponding to this measure that is
basically so modest?
"If it is useful, or if someone is interested, I have at
least three hypotheses for coverage ready - obviously realized
through spending cuts...On all of this, 'pacta sunt servanda',"
he said, a Latin dictum meaning, "agreements must be kept"
despite international calls last week to keep IMU as a "fair and
efficient" tax that has equivalents in virtually all developed
The International Monetary Fund said last Thursday that
Italy cannot afford to lose the billions in euros that are now
generated by IMU.
Echoing the IMF, the chief economist and deputy
secretary-general of the Organisation for Economic Cooperation
and Development (OECD), Pier Carlo Padoan, said Friday the
government should keep IMU.
He suggested that property taxes are the least likely to
dampen economic growth compared with payroll and other labour
taxes that should be cut to boost Italy's recession-plagued

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