House finance committee head says slashing IMU cheap

'Costs easy to cover, a fraction of the budget'

House finance committee head says slashing IMU cheap

Rome, July 8 - The head of the Italian Lower House finance committee on Monday thumped for slashing government spending to meet centre-right demands to scrap an unpopular property tax and to halt the rise of Italy's value added tax (VAT), which currently stands at 21%. "Simple things exist, even in the complexity and in the confusion of the current political phase. There are two commitments that would do good for this country, that will good to the Italian economy, that will benefit the popularity of this government and that, last but not least, cost relatively little," said Daniele Capezzone, a 40-year-old MP from Silvio Berlusconi's People of Freedom (PdL) party. "It has to do with the total abolition of the IMU (property tax) on the first home and on agriculture, and sterilizing the VAT increase. Together, for 2013, they cost six billion euros, and that is, compared to 800 billion euros in annual national public spending, barely 0.75%, or a 1/133 fraction of the mountain of (total) public spending. Is it possible that we are not capable of cutting public spending (by an amount) corresponding to this measure that is basically so modest? If it is useful, or if someone is interested, I have at least three hypotheses for coverage ready - obviously realized through spending cuts...On all of this, pacta sunt servanda" he said, citing the Latin phrase meaning, "agreements must be kept". Scrapping the IMU was a key pledge for the PdL, led by ex-premier Silvio Berlusconi, and was behind his surprising comeback in February's general election. The PdL has since staked its political reputation on eliminating the IMU tax on primary residences, making its reform or elimination a divisive issue that threatens the survival of Italy's unprecedented right-left government. On Friday, PdL Senate Whip Renato Schifani urged his centre-left counterparts to denounce international support for the property tax, which would require four of the six billion euros of coverage cited by Capezzone. The International Monetary Fund said last Thursday that Italy cannot afford to lose the billions in euros that are now generated by IMU. Echoing the IMF, the chief economist and deputy secretary-general of the Organisation for Economic Cooperation and Development (OECD), Pier Carlo Padoan, said Friday the government should keep the IMU. He suggested that property taxes are the least likely to dampen economic growth compared with payroll and other labour taxes that should be cut to boost Italy's recession-plagued economy.

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