Rome

Government set to grab IMU nettle

Letta seeks to smooth differences between parties at summit

Government set to grab IMU nettle

(By Kate Carlisle) Rome, July 4 - A solution for the unpopular property tax called IMU will be hammered out by the summer recess that starts August 15, Italian government sources said during coalition meetings on Thursday. The property tax has been one of the most divisive issues plaguing Premier Enrico Letta's creatively cobbled, right-left coalition, merged together from opposing parties. Letta called a meeting for members of his coalition Thursday to discuss key reforms and to attempt to smooth over internal battles threatening to destabilize his unprecedented left-right government. Letta, who was sworn in on April 28 at the helm of a broad coalition government, has vowed to lift Italy out of its longest recession since World War II. But many of his efforts have been hampered by divisions between his Democratic Party (PD) and ex-premier Silvio Berlusconi's People of Freedom Party (PdL). IMU has been at the top of the list of contentious issues as its elimination was used as a bargaining card by the PdL for joining arms with sworn enemies the PD and forming an executive after two months of a stalemate that left Italy hanging without a government. The PdL's fervent demand to scrap the loathed property tax has even spurred into threats of the party pulling its support and sinking the government if it fails. Letta's predecessor Mario Monti said Sunday that his small Civic Choice party would also withdraw its support for the government if it fails to move up a gear. Unlike Berlusconi's PdL, Monti's party is not big enough to sink the administration, but the threat is seen as indicative of its problems. But Letta said following Thursday's government meetings that relations were "good" and that he had reiterated to his coalition a "commitment for greater involvement of all parties". Another key issue central to Thursday's talks, provincial administrations that are widely seen as an unnecessary and expensive layer of administration, ended with the government vowing to do away with them. Eliminating the provinces would leave the central government to deal with the regions and municipalities without having to go through the provincial level, cutting costs and red tape. Italians voted to drop provincial governments in a recent referendum but the Constitutional Court last month ruled it was against Italy's Constitution to scrap them. Letta's government has pledged to cut political spending in the face of widespread voter ire over pork-barrel scandals that produced a huge protest vote in February's general election. Following Thursday's meetings, Letta said that the government would present a bill to change the Constitution to remove provincial governments. Skeptics claim the savings from the move will be less than hoped and provincial workers will have to find jobs elsewhere in the civil service. Another crucial topic looming for Letta's executive is the repayment of tens of billions of euros' worth of the public administration's overdue bills to private businesses. Early last month, the Lower House passed a bill approving payments on outstanding debts to businesses. The bill should allow the government to pay up to 40 billion euros in overdue bills by the end of next year. Repaying the debts has been seen as an important tool in providing the recession-plagued economy with a shot-in-the-arm of liquidity. Italy's industrial association Confindustria has issued several loud calls for payment on the overdue bills to help relieve the credit crunch that has been strangling Italian businesses, and claims that the real total owed is actually well over 100 billion euros. Unblocking the public administration's payment of some 40 billion euros overdue to its suppliers was a goal set by the former technocrat government led by Monti. Letta confirmed his commitment to do so at Thursday's summit.

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