Rome

Letta sees solid govt future after IMU deal

'Now onto Constitutional, electoral reforms' says premier

Letta sees solid govt future after IMU deal

(By Christopher Livesay) Rome, August 29 - Italian Premier Enrico Letta said the future looked bright for the left-right government now that a controversy over a property tax was behind him, despite ex-premier Silvio Berlusconi's ongoing legal and political woes. "I am not afraid that there will be an influence on the life of the government...due to the convictions or legal proceedings (of Berlusconi)," Letta told Italian radio. Berlusconi's supporters have threatened to pull their support and topple the government if the Senate votes next month to ratify stripping the three-time premier of his Senate seat, an anti-corruption penalty that kicked in following his first-ever binding criminal conviction on August 1 for tax fraud at his Mediaset media empire. But Letta appeared relieved following a deal forged Wednesday between his centre-left Democratic Party (PD) and his government coalition partners, Berlusconi's center-right People of Freedom (PdL) party, over reforming the IMU real-estate tax. The agreement, which reforms IMU under the umbrella term "service tax" and exempts most sections of society, ends months of partisan quarreling and threats from the PdL to bring down the government if the tax stayed in place. By campaigning hard against IMU, Berlusconi and the PdL roared to a surprising second in February elections, ultimately securing a junior partnership in the government where their influence has proved considerable following the latest accord. "Now we can look towards the future of the government with much more confidence," Letta said Wednesday. But a final hurdle in the form of the value added tax (VAT) may still remain. Deputy Economy Minister Stefano Fassina said Thursday that the IMU reform will force an "irreparable" hike in VAT scheduled October 1 due to a subsequent multi-billion-euro revenue hole. Early last month, Economy Minister Fabrizio Saccomanni sparked the ire of the PdL when he said that the government would be "hard-pressed" to find the money to cover repealing IMU and still afford not raising VAT by 1% in the top rate, from 21% to 22%. Doing both, he said, would make it difficult to stick to Italy's commitment to the EU to keep its deficit-to-GDP ratio under 3%. Analysts now fear that a new debate may erupt within the fragile government government. That did not stop Letta from looking forward. On Thursday he said that reforming the current election law blamed for much of Italy's political instability will now be at the top of his coalition government's agenda. Speaking on Italian radio, Letta said the current system poses "a principle danger to our country". The law - passed under a previous government of Berlusconi and often referred to as Porcellum, or 'pigsty' - has been widely blamed for leading to inconclusive February election results, two months of political deadlock, and now the unprecedented left-right government. "Italians need a government, one with answers and solidity," said Letta. Efforts to introduce Constitutional changes to make the country easier to govern, another top priority for Letta's government since its April inception, have also been stalled amid the IMU row. Now, said Letta, "making Constitutional and electoral reforms will be the priorities this autumn".

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