Brussels

IMU deal 'close' says minister

Berlusconi threats to tank government lurk over tax plan

IMU deal 'close' says minister

(By Christopher Livesay) Brussels, July 9 - Economy Minister Fabrizio Saccomanni said Tuesday the left-right coalition was close to reaching an agreement over the contentious issue of scrapping or upholding the IMU property tax that some fear may tank the government. "We're holding a meeting tomorrow and this is the focus," he said. Three-time premier Silvio Berlusconi, who swept to second in February elections on an anti-IMU platform, has threatened to pull his center-right party's support and topple the government if the tax is not repealed, something he says will stimulate consumer spending and economic growth in recession-plagued Italy. The government has so far postponed payments of the tax while the economy ministry has stressed anything more would threaten the health of the public coffers. The EU has recommended that Italy relieve some of the tax burden on labor by shifting it to consumption and property. Olli Rehn, the European commissioner for economic and monetary affairs, said on Tuesday he was "certain the Italian government will take into serious consideration" the EU's recommendations to keep the contentious IMU property tax. International bodies have also urged Italy not to roll back IMU. The International Monetary Fund said last Thursday that Italy cannot afford to lose the billions in euros that are now generated by IMU, calling it a "fair and efficient" tax that has equivalents in virtually all developed countries. 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 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 economy. But the center right is demanding the government scrap the tax as well as avert a rise in the top band of a value-added tax (VAT), from 21% to 22%, that is scheduled after being put in place by the technocrat administration of former premier Mario Monti. Saccomanni has said implementing both measures would cost four billion euros each and the total eight-billion-euro public cost would entail "compensatory measures of extreme severity, which at the moment is preposterous".

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