Italy freezes hated property tax, doesn't say how will make up shortfall

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Italy freezes hated property tax, doesn't say how will make up shortfall

Italy freezes hated property tax, doesn't say how will make up shortfall
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Italy’s coalition government is to freeze a controversial property tax, abolish the double salary received by government ministers who are also members of parliament and has pledged one billion euros to boost unemployment benefits for workers placed in special temporary redundancy schemes

Prime Minister Enrico Letta’s centre right coalition partners wanted the property tax scrapped but at a news conference on Friday he said only that the payments due in June are being pushed back to September.

He said that “the end of August is now the deadline for the coalition government to reform the property tax”.

Letta did not say where he would find the two billion euros that was due to come from that property tax. That money is needed to help cash-strapped local authorities fund their municipal services.

All of the proposals from the cabinet have to be approved by parliament.

Taxing times

The hugely unpopular levy, which covers certain agricultural buildings but excludes luxury residences, was brought in by Letta’s predecessor Mario Monti to try to balance Italy’s budget.

Silvio Berlusconi’s People of Freedom party (PDL) has made it a banner issue, threatening to leave the coalition if it is not scrapped.

As well as repeatedly demanded its complete abolition the PDL has demanded repayment of contributions paid in 2012, a move which would cost around eight billion euros.

Letta’s centre-left Democratic Party wants a more limited cut to the housing tax, to ensure that lower income families get the greatest benefit. It believes the main priority should be finding ways to head off a planned increase in sales tax due to come into effect in July.

The head of the Confindustria business lobby, Giorgio Squinzi, as well as economists from international bodies such as the Organisation for Economic Cooperation and Development, have also said the government should first look at cutting payroll charges rather than the housing tax.