Italian Prime Minister Enrico Letta. (Bloomberg)
ROME (AP) ― The International Monetary Fund pressed Italy on Thursday to do more about “unacceptably high” unemployment, especially among young people and women, and urged it to bring back an unpopular property tax whose return could threaten the survival of Premier Enrico Letta’s coalition government.
Former premier Silvio Berlusconi made suspension of the tax on primary residences a condition of his conservative forces vital support for Letta’s government. Letta reluctantly agreed to let property owners skip paying the tax in June, and has said his government would decide later in the year whether to revive the tax, which brings in some 4 billion euros ($5.2 billion) in revenue annually.
In a report at the end of its annual visit to the country, the IMF told Italy the tax “should be maintained.” Berlusconi’s lawmakers immediately countered with a vow that the tax would be abolished, raising tensions in the already uneasy coalition.
Berlusconi’s center-right People of Freedom party, “reiterates that it is absolutely necessary” to abolish the tax, said Anna Maria Bernini, a senator in the party. While expressing “maximum respect” for the IMF’s analysis, Bernini said the backing for the government “came from our lawmakers in Parliament and not the IMF.”
Berlusconi had made abolishing the tax the main plank of his populist campaign for election earlier this year. His forces came in second, and their backing was needed to secure Letta’s center-left bloc enough support in Parliament to govern.
Mario Monti, who succeeded Berlusconi in late 2011 when financial markets lost faith in the media mogul’s handling of Italy’s debt crisis, promptly brought the tax back. But Letta was forced to suspend it right after taking office as the price for Berlusconi’s support. Monti paid his own high price for his severe austerity measures, including reviving the tax, when Berlusconi yanked support for Monti’s government late last year.