Berlusconi's party at odds with govt over VAT

PdL whip says 1% increase must be averted, property tax scrapped

Berlusconi's party at odds with govt over VAT

Rome, June 14 - Ex-premier Silvio Berlusconi's People of Freedom (PdL) party was at odds with the left-right government it is sustaining over tax policy on Friday. On Thursday Economy Minister Fabrizio Saccomanni said it was not possible to avert a 1% rise in the top rate of value added tax and also have the cash to be able to scrap an unpopular property tax called IMU. The PdL has threatened to pull its support and sink Premier Enrico Letta's broad coalition government if it fails to scrap IMU and refund the revenues raised from it in 2012 to respect the key pledge Berlusconi made in the run-up to February's inconclusive general election. But the centre-right party also wants the rise in the top band of VAT, from 21% to 22%, that was put in place by former premier Mario Monti's technocrat administration dropped amid fears it will further depress weak consumer spending and deepen the country's longest recession in over 20 years. "The resources will be found," said former civil service minister Renato Brunetta, the PdL's Lower House whip, on Friday. "VAT will not increase and IMU on people's main residences will be eliminated. "We are sure Letta will respect his commitments and he will speak to clarify this issue". Letta, a member of the centre-left Democratic Party (PD) who was sworn in as premier in April after two months of post-election deadlock, suspended the June instalment of IMU and has promised to reform the tax before September. He has not pledged to scrap it in public, although PdL members have said that he promised them he would do so. Letta did not comment directly on the VAT furore on Friday but he stressed that sometimes governments had to take unpopular decisions. "It is necessary to have the courage to tell the people the truth and explain with simplicity what can be done and what can't be done, because often you have to say more 'nos' than 'yeses'," Letta said. Saccomanni said Thursday that eliminating IMU and dropping the VAT rise would leave the government needing to find at least eight billion. The minister said this "would force compensatory measures of extreme severity, which at the moment is preposterous".

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