The Italian government is close to scrapping an unpopular property tax but is divided over when, Regional Relations Minister Graziano Del Rio was quoted as saying by daily La Stampa on Monday.

On Saturday, Industry Minister Flavio Zanotato said a deal on ending the so-called IMU tax on primary residences could be announced in fall.

Del Rio said an agreement was near, but a decision over when to scrap IMU payments - in December or only in 2014 - "is a key point and the debate is still open."

Without giving details, he said the tax would be dropped on standard primary residences but be retained on luxury ones.

Prime Minister Enrico Letta is juggling demands to axe the property tax from members of his fragile coalition with pressure to stick within strict budget limits mandated by the European Union.

The government has estimated that canceling IMU would take 4 billion euros ($5.26 billion) in tax revenues from an already strained budget.

Letta has already delayed a VAT hike and suspended IMU payments while promising to reform IMU by end-August.

The economy minister met on Monday with officials from the parties of the governing coalition to discuss property tax reforms.

Reuters