Italian premier says coverage tough for property tax and VAT

'Capping VAT and slashing IMU top, complex priority'

Italian premier says coverage tough for property tax and VAT

Rome, July 4 - Italian Premier Enrico Letta on Thursday announced the government's top political priority - to staunch a creeping value-added tax (VAT) and to make cuts in the loathed IMU property tax - will hit significant trouble due to lack of financial coverage and budget restrictions imposed by the European Union. "The first goal is the most difficult," Letta told journalists in Rome after a summit held by the parliament majority to establish a road map for the current legislature. Capping the VAT and slashing the IMU are "the most complicated things (on the agenda), because they come with the 2013 budget, which is still rigid and does not enjoy the flexibility" guaranteed by the decision announced on Wednesday in Brussels, Letta said. On Wednesday European Commission President Jose' Barroso announced the EC was allowing "greater flexibility" in eurozone countries for public investments, but belt-loosening is not scheduled to begin until 2014, and still does not allow exceeding a 3% budget-deficit limit. "Coverage must be found completely within the budget, and that is not easy," Letta said. The government has been trying to avoid raising the VAT tax from its current rate of 21%, but has warned in recent weeks that covering the budget may necessitate a new hike. The centre-right in the right-left majority has made fulfilling its election promise to abolish the IMU and reimburse 2012 payments a condition for supporting the current government. Letta also told journalists the new budget for this year "could enjoy the first elements of flexibility, will be wholly focused on the development and relaunch of the economy, on the digital agenda, on infrastructure and on the possibility of reducing taxes, particularly on labor".

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