Martedì, 16 Ottobre 2018

Property-tax row keeps Letta govt on tenterhooks


(By Paul Virgo)
Rome, August 9 - Premier Enrico Letta's left-right
government was engulfed in more turmoil on Friday, when a row
over a property tax added to the tension that followed the
supreme court's decision to uphold a tax-fraud verdict against
Silvio Berlusconi last week.
Letta pledged the issue of the unpopular IMU property tax
would be resolved by the end of the month to cool the firestorm
after ex-premier Berlusconi and outraged members of his People
of Freedom (PdL) party reacted with fury to comments made one
day earlier by Italy's economy minister.
Fabrizio Saccomanni said it would not be fair to eliminate
the tax, adding that the country cannot afford to lose the
billions in revenue it generates.
"Italy should not be afraid of the future," said
Berlusconi, who made scrapping IMU his key pledge in the run-up
to February's general election and has threatened to sink the
grand coalition government if it is not respected.
"We will never fail in our IMU commitment," he added,
saying the issue was a "battle for freedom".
The latest round in the long-running battle over the tax
came Thursday, when Saccomanni said that abolishing the IMU
property tax would cost the government 2.426 billion euros in
revenue in 2013.
In a list of nine hypothetical reforms to the tax,
Saccomanni laid out the impact on revenue and the effects on
"The proposed exemption of IMU for primary residences does
not seem fully justified in terms of fairness and efficiency,"
said Saccomanni, a non-political former deputy governor of the
Bank of Italy.
Junior Economy Minister Stefano Fassina, a member of
Letta's centre-left Democratic Party (PD), said the PdL should
now drop its demand for IMU's abolition so the government could
help the unemployed and families in hardship during the
recession instead of the "Scrooge McDucks" of the world.
Letta's fragile government is based on an unnatural
alliance between the long-standing rivals in the PD and PdL, who
came together in April to end two months of deadlock after
February's inconclusive general election
As well as promising a resolution on IMU, Letta on Friday
warned the feuding parties supporting his government that the
threat of Italy facing a financial meltdown has not been
completely averted.
Many commentators see the coalition in danger of
collapsing soon after the tax-fraud verdict and Foreign Minister
Emma Bonino admitted Friday that the challenge the government
faced amid the turmoil was close to "impossible".
Letta reminded the parties of the situation two years ago,
when Berlusconi was forced to step down as premier at the height
of the eurozone crisis to make way for Mario Monti's emergency
technocrat administration.
At the time the cost of servicing Italy's huge public debt
soared, with the spread between the 10-year Italian bond and the
German benchmark reaching over 500 basis points and the country
looking in danger of a Greek-style meltdown.
The spread, a key measure of investor confidence, dropped
after Monti introduced a series of tax hikes and spending cuts
to improve Italy's public finances before Letta's executive took
power in April.
The spread has remained steady since last week's verdict,
and briefly touched a two-year low on Friday, a possible sign
the money markets do not expect the government to collapse
But Letta warned that this may not remain the case if the
turbulence escalates further.
"I hope the Italian political world does not forget the
importance of interest rates and the spread," Letta told a press
"I have the impression that it was talked about a lot in
2011, but then, as often happens in Italy, it wasn't digested
and it wasn't talked about any more.
"Confidence has returned to the markets, as shown by the
spread. This confidence should encourage us to press on, not to
Letta stressed, however, that he did not think the
government was an unsteady as it might look.
"You know that we are used to sailing on a ship in storms,
waves and billows," he said.
"The ship is proving to be more solid that our critics

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