Rome

VAT hike inevitable with IMU reform, Fassina says

Further government infighting feared

VAT hike inevitable with IMU reform, Fassina says

(see related) Rome, August 29 - Deputy Economy Minister Stefano Fassina said Thursday that a government deal reached to reform the IMU property tax will force an "irreparable" hike in the value added tax (VAT) scheduled October 1. Ministers finalized a deal to readjust IMU on Wednesday, agreeing to plug the multi-billion-euro revenue hole with spending cuts and tax hikes that have yet to be elaborated in full. Early last month, Economy Minister Fabrizio Saccomanni sparked the ire of the centre-right People of Freedom (PdL) party of ex-premier Silvio Berlusconi 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 left-right government, after months of threats from the PdL to topple the government if it refused to scrap IMU, Berlusconi's main bugbear.

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