Rome

Letta and Berlusconi 'agree to postpone VAT increase'

Government to decide in September

Letta and Berlusconi 'agree to postpone VAT increase'

Rome, June 26 - Prime Minister Enrico Letta and ex-premier Silvio Berlusconi, whose centre-right People of Freedom (PdL) party is supporting the current left-right coalition government, have agreed to postpone a controversial increase in value added tax (VAT), ANSA sources said Wednesday after the pair met late on Tuesday. The decision on a 1% increase in the top band of VAT from 21% to 22% has been reportedly pushed back till September, with the possibility of yet another postponement until December. So the rise will not come into effect next month as originally scheduled. The decision will be approved at a cabinet meeting on Wednesday, the sources said. Both VAT and a highly unpopular housing tax, IMU, have been problem issues for Letta, a member of the centre-left Democratic Left (PD) party, with the PdL party threatening to pull the plug on executive if IMU is not scrapped and the VAT increase averted.

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