On the Role of the Property Tax in Financing Local Expenditure: The Case of Italy

The Political Economy of Property Tax Reform

“…The municipal property tax (imposta communal sugli immobile) was first introduced in Italy on a temporary basis in 1992 and was supposedly made permanent in 1993. The tax base included residential, commercial, and industrial buildings plus agricultural and residential land (Longobardi 2013). Tax rates were set by municipal governments within the range of 0.4 to 0.7 per cent.…”

“…The exemption of owner-occupied dwellings lasted until 2011 when, as part of a major package of fiscal reforms, the local property tax was reformed. Interestingly, both the introduction of the property tax in 1992 and the re-introduction in 2011 occurred in the context of a financial crisis (Longobardi 2013). Opposition to property tax reform was overcome in these exceptional circumstances.…”

Shifting Taxes from Labour to Property: A Simulation Under Labour Market Equilibrium

“…The property tax was first introduced in Italy in 1992 as a municipal tax (ICI, Imposta Comunale sugli Immobili) on residential, commercial, and industrial buildings plus agricultural and residential land but since 2008 owner-occupied dwellings were exempted from the tax. As in the case of 1992, opposition to property tax reform was overcome in the context of a financial crisis (Longobardi, 2013) and in 2012 Italy introduced a new property tax (IMU, Imposta Municipale Unica) that fundamentally reformed and increased property taxation, including the owner-occupied dwellings into the tax base which is represented by the imputed values (i.e. the re-evaluated cadastral values) of the dwellings.…”

“…5 However, the tax on primary residences has been in place only for one year because it has been frozen and then abolished in the 2013. A full review of the housing taxation is again under consideration and the new tax will be more similar to a comprehensive service tax, resembling the British Council Tax and the French system of a tax foncière and a taxe d'habitation (Longobardi, 2013).…”

“…We propose to consider a hypothetical tax reform in Italy, a country characterized by a relatively high tax burden on labour income, the absence of any generalized form of income support for the poorest and a renewed policy interest for property taxation (Longobardi, 2013). In particular, we simulate the new regime of property taxation as introduced in Italy in 2012.…”