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The EC noted that the Italian Government had beenrequested to reduce the country's fiscal deficit fromthe 5.5 percent of gross domestic product (GDP)seen in 2009 to the 3 percent required under EUregulations by last year. In fact, the fiscal deficit wasexactly on target in 2012, and is forecast by the ECto reduce again marginally to 2.9 percent this yearand to 2.5 percent in 2014.comments of EC President José Manuel Barroso,who pointed to the country's very high public debtlevel as a reason to continue fiscal consolidation,and the Monetary and Financial Affairs CommissionerOlli Rehn, who remarked that the currentplan to repay tax refunds and credits to businesseswould take away much of the Government's roomfor maneuver.The EC has also looked at the measures announcedby the new Government on May 17 and, in particular,at the Government's suspension of the interimpayment of IMU, the local property tax, on firstresidences that was due on June 16.It has decided, given that the present Governmenthas confirmed that it will maintain the previousGovernment's budgetary constraints, that the IMUpayment will be due on September 16 if overallproperty tax reform is not agreed by the Governmentby end-August, and that the effect of that reformis expected to be revenue-neutral, Italy's improvedfiscal position is likely to last.However, while Italian Premier Enrico Letta paidtribute to the policies adopted by previous Governments,particularly that led by Mario Monti, forthe EC's decision and said that all of Italy should beproud of its achievement, he will have also heard theWhile the Government is aware that the closureof the EU procedure for excessive deficit will onlyhave an effect on Italy's budget in 2014, it wants toavoid a 1 percent increase in the normal rate valueadded tax due in July this year, and is also beingpressurized by Silvio Berlusconi's center-right Peopleof Freedom party, which is a member of Letta'sbroad governing coalition, to scrap the IMU propertytax on first residences entirely, and even returnthe tax levied in 2012.On the other hand, the EC's country specific recommendations,made at the same time as the excessivedeficit review, are contrary to both of the currentGovernment concerns. The EC strongly suggeststhat a shifting of the tax burden towards, and notaway from, consumption and property will be essential,in order to reduce the very high fiscal burden onemployers and employees in a revenue-neutral wayand to foster economic growth and competitiveness.62