Letta says will cut taxes, not how to make up revenue

'We'll decide together' he says amid Berlusconi IMU threat

Letta says will cut taxes, not how to make up revenue

Rome, May 2 - Italian Premier Enrico Letta said on Thursday that the burden on taxpayers must be lightened but stopped short of spelling out how the new government will cover the costs. "Italy is under absolutely unbearable fiscal pressure in every area. In perspective the pressure must be reduced, but without fiscal relaxation," he said. When asked how his government would achieve the "corrective measures" to cover tax cuts announced in Parliament, Letta responded: "We will decide together as a majority". The new centre-left premier, who was sworn in with his cabinet on Sunday, is under pressure to reveal how his government will fund a reform of the IMU property tax. The tax was introduced by former Premier Mario Monti and has become a political battleground, with ex-premier Silvio Berlusconi's election campaign dominated by his promised IMU refund and a potentially terminal threat now hanging over the government if Letta does not do what Berlusconi says. The media magnate and conservative politician says he will pull the plug on the unprecedented and unnatural left-right executive if he does not get his way. Letta has announced a suspension of the hugely unpopular housing tax for June, to an estimated cost of two billion euros, yet so far failed to announce how the government will be able to afford the measure. Letta has gained support for his new growth-seeking approach from French President Francois Hollande, following a meeting in Paris on Wednesday. "I agreed with President Hollande yesterday that the problem of the tax gap exists in both Italy and France," he said, referring to the large gap between the sum an employer pays and that which an employee receives, after taxes. While Letta has found an ally in Hollande for his proposed tax cuts and push for growth , he is yet to gain the support of German Chancellor Angela Merkel who continues to insist on austerity within the eurozone. Merkel met Letta on Tuesday and told him that she saw no contradiction between growth and budgetary consolidation.

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