Hard-pressed Italians call for Church to lose €3bn tax benefit

As Italians grit their teeth against the coming economic austerity measures, the Catholic Church is being forced to defend the multibillion-euro tax breaks it enjoys on 100,000 properties.

Mario Staderini, leader of the Radical Italians party, has led the latest protests by proposing a parliamentary measure to repeal the Vatican's exemption from the ICI property tax.

Campaigners say the allowance, along with other ecclesiastical tax benefits, robs the Italian treasury of €3bn (£2.6bn) a year. Such a sum, they say, is unacceptable at a time when Italians are being forced to pay more for basic healthcare, as well as seeing cuts to local services and pensions, as ministers seek to slash public spending to calm financial markets.

Mr Staderini said: "Nobody wants to pay their ICI tax to help fund places of worship, and as such they want to abolish the allowance for what are commercial activities carried out by the church authorities."

The Church avoids paying tax on about 100,000 properties, classed as non-commercial, including 8,779 schools, 26,300 ecclesiastical structures and 4,714 hospitals and clinics. The crux of the controversy is whether church-run businesses should be considered as commercial enterprises and therefore liable to taxation.

EU authorities are probing the tax exemption, introduced in 2005 – to much criticism from humanist and secularist organisations – by the former centre-right government of the current Prime Minister Silvio Berlusconi

Last October, the Competition Commissioner Joaquin Almunia said the EC suspected the exemption amounted to state aid that was at odds with European Union law.

Evidence of popular support for Mr Staderini's demands comes from campaigns on Facebook, including one page with nearly 100,000 adherents, that simply says: "Vatican, you pay for the austerity cuts."

An editorial in the Italian bishops' newspaper, L'Avvenire, said the exemption afforded the Church was not a special case but simply a benefit enjoyed by all non-commercial institutions.

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