Italy must still meet targets after scrapping property tax, says Rehn

ALPBACH, Austria Thu Aug 29, 2013 4:14am EDT

The Italian national flag flutters atop of the Quirinale presidential palace in Rome June 26, 2013. REUTERS/Max Rossi

The Italian national flag flutters atop of the Quirinale presidential palace in Rome June 26, 2013.

Credit: Reuters/Max Rossi

ALPBACH, Austria (Reuters) - European authorities will want to ensure Italy can still meet its fiscal commitments after scrapping a property tax, the European Commission's top economic official said on Thursday.

Italy's government reached a deal on Wednesday to abolish the unpopular tax, easing a source of persistent political tension within the country's fragile coalition, and replace it with a new levy known as the "Service Tax".

The Commission is still awaiting details of the "compensatory measures", Olli Rehn told journalists at an economic conference in the Alpine village of Alpbach.

"The essential thing was that Prime Minister (Enrico) Letta reconfirmed that Italy will stick to its fiscal targets in line with its European commitments. That's important."

(Reporting by Georgina Prodhan; Writing by John Stonestreet)