File photo: Silvio Berlusconi
Former Italian prime minister Silvio Berlusconi, whose conservative People of Freedom party (PdL) supports the coalition government, has warned he would pull out unless a controversial property tax worth billions of euros annually is scrapped.
Eliminating the IMU (imposta municipal unica) property tax on people's first homes was a "battle for freedom", Berlusconi said.
He claimed that abolishing the tax would provide a stimulus to Italy's ailing economy by leaving money in the pockets of homeowners.
"Italy should not be afraid of the future. We will never fail in our commitment (to eliminate the tax)," said the billionaire media tycoon, who was recently sentenced to jail for tax evasion by the top appeals court.
Berlusconi's remarks prompted Prime Minister Enrico Letta to pledge that a decision on the tax would be taken by the end of the month.
"I am convinced we'll find a compromise," Letta said on Friday.
Abolishing IMU and reimbursing last year's payments of the tax as the PdL demands, would create a shortfall of some eight billion euros in Italy's 2013 budget, officials said.
The International Monetary Fund has urged the Italian government to maintain IMU, saying it was a fair and effective levy. But the PdL insists the tax is a red line over which the coalition stands or falls.