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MNI EXCLUSIVE:Italy To Drop Property Tax Overhaul Amid Tension

By Silvia Marchetti
     ROME(MNI) - Italy could drop an overhaul of property taxes from a planned
reform of taxation to avoid fuelling tensions within the increasingly shaky
governing coalition, sources told MNI.
     The small Italia Viva party, led by former premier Matteo Renzi, whose
opposition to a planned judicial reform has already led to speculation the
coalition might fall, is also opposed to the proposed revision of the country's
land registry, used to calculate property values for tax purposes, which has
been unchanged since the 1940s. A source with links to the centre-left
Democratic Party said that in order to placate Renzi the land registry measure
might be left out of a planned tax shake-up, which would also cut income tax and
reduce the number of tax bands.
     "We do not exclude that in the near future the land registry could be
updated ... but this would need to be done with extreme care," said the source,
who follows fiscal matters.
     The International Monetary Fund recently urged Italy to update its land
registry taxation scheme to current property market prices, and the Democrats
had wanted a reform including a reassessment of parameters used to calculate the
values of properties from residential homes to warehouses, and to simplify the
system. The total value of Italy's housing stock amounts to EUR6 trillion,
government data shows, and the Democrats argue that the current arrangement
leads to anomalies, sometimes taxing valuable historic houses in city centres
less than properties in out-of-the-way suburbs or rural locations.
     --PUT ON HOLD
     Italia Viva says the property shakeup would push up taxes and be unpopular
with voters. A second Democrat official argued that for the sake of the
coalition's survival the land registry update could be put on hold even if the
issue must still be addressed later in the legislature.
     "It is not good timing, but perhaps in the near future, it could be
discussed and linked to the wider fiscal reform," said the source.
     The Democrats' main coalition partner, the populist 5-Star Movement, has
yet to express a clear position on the proposed reform of the land registry, but
some sources close to 5-Star said they feared it would trigger a rise in
property taxes.
     Different Italian governments have attempted land registry reforms over the
past five years, but always ended up shunting the plans to the backburner. In
October of last year the government was forced to scrap a property reform from
its draft budgetary plan but its plans for a tax system shakeup have put the
issue back on the table. Renzi opposed a similar plan when he was prime minister
in 2015.
--MNI London Bureau; +44 203 865 3829; email:
[TOPICS: MFIBU$,M$E$$$,M$I$$$,M$X$$$,MC$$$$,MT$$$$,MX$$$$]

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