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The Italian local taxes

In Italy in the last five years, there were many local taxes called with different names, but they have a unique aim: taxing the property of real estates and of plots of land. In other words, we can consider these taxes as property taxes.
Until 2009, this kind of tax levied on any real estate and land property owner was called ICI (Imposta Comunale sugli Immobili). The tax base was given by the cadastral rent increased by 5%, multiplied by different values depending on the classification of the property, with a tax rate of 4.8‰. That is, for a property of category A, the most common, with a land registry value of 100.000 €, a cadastral rent around 1000 €, a category A coefficient of 100, the tax bill is roughly 300€ (considering a generic deduction of 200€ for the main home and the ownership of 100%).
The tax return is meant to finance the needs of the municipality. This is the main important difference of the ICI with another tax that followed in time: IMU (Imposta Municipale Unica).
Regarding IMU, the central government gets the part of tax return pertaining to the main home and the local one gets only a surtax. A surtax levied on top of the other tax can be calculated as a percentage of a certain amount or it can be a flat amount. Even though the IMU tax base is the cadastral rent upgraded by 60% (much higher than ICI), the municipalities do not have enough resources to finance their activities due to the fact that they now only have jurisdiction over the surtax. The IMU tax base is 7.6‰ and the surtax is up to 3‰. In order to overcome the problem of resources shortage, the new decentralized legislation allows local districts to impose also other taxes, such as those on services like garbage disposal.
Due to the increase in the burden of the local taxes, the citizens expressed displeasure and a political party proposed the abolishment of the IMU, but only for the private home where a family lives. In other words, the main private home is exonerated.
This action was approved by the central government; however, due to local autonomy, municipalities can still impose, with a certain freedom, a surtax rate also on the main private home.
As a consequence of abolishing the IMU for the main home, the tax return for the central government went down and the ministry of treasury have to correct the financial budget.
In the new financial budget, the central government approved for year 2014 a new tax called TASI (Tassa sui servizi indivisibili). This new tax is very different from the previous ones since it includes both IMU and the other taxes on the public services. From the tax return point of view, the municipalities can modify a surtax rate within the range set by central government. The surtax varies from zero up to a constraint. This constraint is given by the sum of the surtax of TASI and IMU that must be less or equal of the maximum surtax of IMU.
Another novelty is that TASI is paid 90% by the owner of the home and 10% by the renter, if it is a rented property. Therefore, this new tax can be regarded not only as a property tax, but also as a service tax. Moreover, the central government and local districts divide the tax return. On the one hand, we could note that this tax is a local one since it finances local services, as public transportation, street lighting and garbage disposal. On the other hand, a part of tax return finance the central tax system.
At the moment, in Italy there is great confusion about deadlines for payments since the municipalities did not respect their deadline for fixing the surtax. There are different deadlines for paying TASI since it is made up of many different other taxes as IMU and taxes on services.
This chaos threatens the local financial tax system.

Pasquale Pellegrino

References
http://www.ilsole24ore.com
http://www.investireoggi.it
https://servizionline.comune.piacenza.it/Tributi/Utility/CalcoloICI.php
http://www.investopedia.com/terms/s/surtax.asp

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Author: studentnovasbe

Master student in Nova Sbe

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