Rome

Berlusconi's party at odds with govt over taxes

Deputy premier contradicts economy min over VAT, property tax

Berlusconi's party at odds with govt over taxes

(By Paul Virgo) 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. But on Friday he was contradicted by Deputy Premier and Interior Minister Angelino Alfano, who is also the PdL secretary of ex-premier Silvio Berlusconi's People of Freedom. "We are fighting and we will fight to eliminate IMU on people's main residences and to avoid the VAT increase," said Alfano. "It's not a whim, it's an objective we have set ourselves". 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. "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 euros. The minister said this "would force compensatory measures of extreme severity, which at the moment is preposterous". He also suggested the government's priority should be reducting labour taxes to help reduce unemployment, which has reached a record high of 12%, with around four out of 10 young people aged 15-to-24 out of work. This position won backing from Giorgio Squinzi, the president of industrial employers' confederation Confindustria. "The priority is not VAT or IMU, it's the cost of labour," Squinzi said. However, the leader of Italy's biggest trade union, the left-wing CGIL, and two consumers' associations on Friday spoke out against the planned increase in VAT. "I think the right way to go for the country is to say the VAT increase will be halted and the necessary resources will be found to change IMU," said GCIL chief Susanna Camusso. "This is necessary to defend the weakest''. Consumers' groups Federconsumatori and Abusbef also said it was "fundamental" to avoid the VAT increase, stressing it would have ''dramatic consequences'' for families, entrepreneurs and retailers.

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