Development minister booed for hesitating on VAT cuts

Retailers fear spending plunge over consumption taxes

Development minister booed for hesitating on VAT cuts

Rome, June 12 - Italy's industry minister was booed at a business gathering Wednesday when he said he could not promise to freeze a value-added tax. Whistles and complaints rose from retailers' group Confcommercio when Flavio Zanonato said he hoped the government could avoid next month's scheduled increase in the VAT but said there are no guarantees. "I want to say there won't be an increase, it's not what I want," he said, signalling that a freeze may not be possible. The president of Confcommercio Carlo Sangalo continued to call on the government to try hard to freeze or lower the VAT. His group fears that higher consumption taxes will keep Italian consumers, who are already cutting back, from further spending. That, in turn, could further weaken the Italian economy now in its longest recession in roughly 20 years, the group maintains. Italy's Finance Minister Fabrizio Saccomanni has previously said that the government needs "to concentrate on investments" to boost growth and jobs, and that it is driving the 1% increase in the top band of VAT effective next month that will take it from 21% to 22%. Both the VAT and a highly unpopular housing tax, the IMU, are critically important to the government of Premier Enrico Letta because the revenues they generate keep the country running, said Minister of Infrastructure and Transport Maurizio Lupi. "I understand the difficulty, but the IMU and VAT are a staple (of the budget) and the government will be measured with this," Lupi said as he entered the House. He suggested the government is looking for other revenue sources to replace the VAT increase, but did not sound optimistic. Cutting the VAT and the IMU, are vital to free up spending in the economy, argued Renato Schifani, leader of the center-right People of Freedom (PdL) party in the Senate. Ex-premier Silvio Berlusconi, founder of the PdL, has vowed that unless the coalition government scraps the IMU, he will bring about its collapse. (photo: Industry Minister Flavio Zanonato)

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