Italy government reaches deal to reform housing tax

Italy's Prime Minister Enrico Letta speaks during a joint news conference with Afghanistan's President Hamid Karzai (not pictured) in Kabul August 25, 2013. REUTERS/Mohammad Ismail

ROME (Reuters) - Italy's government reached a deal on Wednesday to reform an unpopular housing tax, easing a source of persistent coalition tensions.

The cabinet agreed to abolish the housing tax known as IMU from the start of 2014, Prime Minister Enrico Letta told reporters, replacing it with a new levy known as the "service tax."