Italians are lining up to pay their property tax today as the deadline looms; the period for paying one of the levies reinstated by Prime Minister Mario Monti in December is coming to an end. The state hopes to raise about 21 billion euros – 9 billion euros will be for the central government and 12 billion will pour into local council coffers, Repubblica reports. That’s if everyone pays up.
The government is in a race to collect funds as the economy sputters. Value-added tax receipts, revenue from sales tax, have declined since Monti’s predecessor, Silvio Berlusconi, raised the rate by 1 percentage point in September, government data released June 5 showed, according to Andrew Frye. The amount collected fell in the 12 months ended April 30 to the lowest since 2006. So not all tax raises necessarily result in more income for the state.
As a result of the property tax, expect to see a continued trend of Italians giving up their second homes. The Osservatorio Censis-Abi says about 17 percent of homes in Italy are unoccupied, down from 21 percent in 1991. That reflects fewer second homes and fewer people hanging on to property they inherited. And homes may shrink in size as well: in the past 20 years the average Italian home has become almost one room smaller, according to Censis-Abi.
Still, Italians invest their money differently to some Europeans. Homeownership is extensive compared with Germany or France: 81 percent of Italians live in a home they own, up from 64 percent in 1981, according to Repubblica. That compares with 61 percent of French people living in owned homes, and just 46 percent of Germans. Despite the higher taxes, the popularity of property as an investment among Italians is unlikely to wane any time soon. The alternatives, such as investing in bonds, don’t look very enticing to say the least.