ROME, Sept 27 Italy's government will delay an
increase in sales tax, heeding coalition demands, but will raise
tax on petrol and increase advance corporate tax payments,
according to the draft of a decree to be discussed by the
cabinet on Friday.
Silvio Berlusconi's People of Freedom party (PDL), a key
partner in Enrico Letta's fragile left-right coalition, has
threatened to bring down the government unless it abandons the
sales tax hike, due to take effect in October.
The increase, which had already been postponed from July to
October, will now be delayed until the start of January,
according to the draft decree obtained by Reuters.
The cabinet is expected to discuss and approve the decree at
a meeting slated to begin at 1730 GMT.
However, amid political turmoil concerning the future of
Enrico Letta's government, no formal agenda for the cabinet
meeting has yet been released.
To find the roughly 1 billion euros required to avoid the
hike in the main sales tax rate to 22 percent from 21 percent,
the government will increase petrol prices, already among the
most expensive in the European Union.
Excise duties on fuel will rise by two euro cents per litre
to the end of this year and then increase by a further 2.5 cents
from the start of 2014.
At the same time advance payments of the business taxes Ires
and Irap due in December will rise to 103 percent of the
expected full-year tax bill, from 101 percent at present.
This will increase tax revenues at the end of this year but
will result in lower revenues in 2014 because the higher advance
tax payments will be compensated by lower payments at the next
instalment due in mid-2014.
The centre-right People of Freedom party, however, showed no
sign of being appeased as details of the draft decree leaked.
PDL lawmaker Daniele Capezzone, the head of the lower house
finance committee, said it was "simply unacceptable" that the
government should try to fund a suspension of one tax hike by
raising and bringing forward other taxes.
He said the proposal indicated that it was time to put an
end to Enrico Letta's left-right coalition government, which was
formed following an inconclusive February election.
(Reporting by Giuseppe Fonte, writing by Gavin Jones; Editing
by Susan Fenton)