IMU, the property tax payable in two annual instalments, has become something of a political football. The decision was announced at the end of August to cancel IMU due for 2013 on first homes, although it remains payable on second homes (the status primarily applicable to international purchasers buying a property on Lake Como or Italy generally, other than those who have taken Italian tax residence and declared a property as their ‘prima casa’).
A provisional decision had been taken to defer the first instalment of IMU on first homes for 2013 to mid-September and the Letta government took the decision to cancel the IMU obligation completely for first homes just ahead of the imminent deadline for paying the first instalment.
The €2bn loss of revenues from the September 2013 IMU payment on first homes is being financed by other public expenditure cuts. The 2014 budget, which will be debated next month, will address the question of funding the further €2bn cost of cancelling the second instalment of 2013 IMU on first homes. It will also introduce a service tax from 2014 to replace the lost IMU revenues. Quite how the tax will be calculated, on what it will be levied, and whether it will be at a single national rate or left for local determination all remains to be seen.
….and the political background for those who are interested
IMU (or strictly speaking its various predecessor taxes which were combined into the unified IMU) came into political play with Silvio Berlusconi’s populist promise to cancel the tax for first homes in his 2008 election campaign, and he did just that once in office.
Berlusconi was forced to step down in 2011 as a result of failing to tackle the ballooning Italian state deficit. The replacement government led by technocrat Monti reintroduced the obligation of first home owners to pay IMU as an important element of a package of tax reforms required to satisfy the EU’s limits on budget deficits.
Following elections earlier this year Enrico Letta became Prime Minister of a coalition government reliant on the support of Berlusconi’s party. Berlusconi lobbied publicly once again to remove the obligation to pay IMU on first homes. With the threat of withdrawal of Berlusconi’s support and so the expected collapse of the coalition government, Letta initially deferred payment of the first instalment for 2013 from June to mid-September, and then announced the cancellation of IMU on first homes with a replacement service tax due to be introduced in 2014 to replace the €4bn pa of lost revenues.