Italian cabinet votes to reintroduce property tax

A tax on first homes is to be reintroduced in Italy, it has been revealed.

Following talks over the weekend about how best to reduce the country's budget deficit, a package of austerity measures has been finalised.

Among them is to bring back a levy charged on first home purchases that was abolished by the previous government under Silvio Berlusconi.

New prime minister Mario Monti, who was sworn in on November 16th, will now take the proposals to the country's parliament and if approved, it is thought the steps will save ?30 billion (£25.79 billion).

Last month, a letter sent by former economy minister Giulio Tremonti to European Union authorities suggested that abolishing the Italian property tax may have cost the country as much as ?3.5 billion in lost revenue each year.

In November, president of Istat Enrico Giovannini told Reuters that, as so much of Italians' wealth is tied up in real estate, a permanent tax on such assets would help produce income for the government.