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Berlusconi Would Replace Property Tax With Swiss Treaty

by Ulrika Lomas,, Brussels

28 September 2012

Silvio Berlusconi has said that, if he were elected to form the next Italian government, he would cancel the Monti government’s local property tax on primary residences and replace the lost revenue by concluding a tax agreement with Switzerland.

This year, IMU, the unified property tax, reintroduced the taxation of prime residences that had been taken off by a previous Berlusconi government. IMU is to provide the greatest slice of the revenue under the Monti government’s ‘Save Italy’ budget, which was approved at the end of last year and is designed to enable the country to reach fiscal balance by the end of next year.

From this year, IMU applies a standard rate of 0.76% applying to all properties, with local variations and only a reduced rate for first residences. The new tax has caused criticism and controversy in Italy, with a threatened but unrealized taxpayer revolt, although the revenue it has collected has, so far, reached government expectations.

However, with the current caretaker government expected to give way after general elections in 2013, there have been further recent political rumblings against IMU as public attention has been drawn to the extent of local tax increases due to further payments this month and a possible final payment in some municipalities at the end of the year.

Taking advantage of those rumblings, and although he has not yet declared his intention of returning to politics, Berlusconi has announced that he would repeal the tax on first residencies if he was returned to power next year.

The government has confirmed its view that there are currently few possibilities for a reduction in taxation under its fiscal deficit and debt targets, altohugh it hopes, eventually, to reduce tax burdens for families and companies. Berlusconi, however, appears intent on providing another, more popular, way.

Aside from a declaration that he would have resisted the stringent deficit balancing targets ‘imposed’ in Italy from Europe, Berlusconi has also pointed out, in an interview in the United States, that the conclusion of a tax agreement with Switzerland against tax evasion, on the same lines as the latter has already concluded with Germany and the United Kingdom, would rake in twice the tax revenue received from IMU on first residences.

TAGS: tax | investment | economics | real-estate investment | double tax agreement (DTA) | property tax | fiscal policy | law | real-estate | budget | agreements | Italy | Switzerland

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