Berlusconi Makes Italians Offer They Can’t Refuse

Italian prime minister Silvio Berlusconi arrives for a European Council meeting in Brussels, October 26, 2011

Italian prime minister Silvio Berlusconi arrives for a European Council meeting in Brussels, October 26, 2011 (The Council of the European Union)

Italy’s right-wing leader Silvio Berlusconi on Sunday promised sweeping tax reductions if his party is elected to government later this month. Notably, he advocated the elimination of a hated property tax implemented by incumbent prime minister Mario Monti, something he said “will restore public trust in the state.”

In a passionate address to supporters in the northern city of Milan, the septuagenarian former premier said that he would scrap the tax and refund payments already made. He also promised that a conservative government would eliminate a regional business tax and cancel plans to raise the value added tax and impose a wealth tax on rich Italians. The decline in revenue should be offset by deeper cuts in government spending, including the public financing of political parties.

With three weeks to go before parliamentary elections are due to take place in Italy, Berlusconi has managed to boost support for the right-wing Il Popolo della Libertà in the polls. His coalition with the separatist Lega Nord trails the left-wing parties led by Pier Luigi Bersani by just 5 percentage points in one recent survey. The left enjoyed a 15 point lead as recently as early January.

“We are one step away from victory,” Berlusconi was quoted as saying on the website of his party. “The left is afraid. They are losing sight of victory which they thought was in the bag.”

Berlusconi rallies against the austerity measures that have been imposed by former European commissioner Mario Monti who took over as prime minister in November 2011 when Italy appeared to teeter on the brink of bankruptcy. Monti led a technocratic administration that raised taxes, reduced pension payments and made some efforts to liberalize Italy’s labor market and service industries.

Both Berlusconi’s Il Popolo della Libertà and Bersani’s Partito Democratico supported Monti’s government through last year. The former pulled its support in December, citing a collapse in home sales as a result of the new property tax, continued economic stagnation and tepid labor market reforms that were watered down under pressure from the country’s trade unions and the left.

“The situation today is much worse than it was a year ago when I left the government out of a sense of responsibility and a love for my country,” said Berlusconi in early December when his party’s decision to withdraw its support from Monti’s government triggered new elections.

Since, the former premier has touted his willingness to stand up to Germany which many Italians blame for the austerity policies that Monti has enacted. “I was one of the two, three most influential leaders in the European Council,” said Berlusconi in a television interview last month. “I continuously opposed German proposals and demands.”

He also urged the European Central Bank, chaired by the Italian Mario Draghi, to print more money so countries in the south of Europe can finance their deficits in the absence of private-sector funding. The Germans would be extremely apprehensive of such an activist monetary policy for fear of driving up inflation.

If the ultimate consequence of a disagreement over monetary policy is either Germany or Italy leaving the eurozone, Berlusconi said last summer that would “not be the end of the world.”

Opinion polls still give Bersani’s left-wing coalition with the smaller Sinistra Ecologia Libertà the best chance of securing a plurality of the seats in parliament but he would likely need the support of centrist parties that favor Monti’s reelection to secure a majority in the upper chamber. Sinistra Ecologia Libertà did not back Monti’s economic and fiscal reform efforts last year, however, and party leader Nichi Vendola has dismissed the possibility of joining a coalition that includes the incumbent premier as “fantasy politics.”

Monti, for his part, has all but ruled out a coalition with the right as long as it is led by Berlusconi. He told Italian radio last week that he had “no intention of making any agreement with parties that aren’t strongly reformist” but also said that he could “easily imagine a collaboration” with Il Popolo della Libertà if Berlusconi resigned.

If the right does win the election, Berlusconi has said that he will not return as prime minister. Rather Angelino Alfano, who is currently the party’s secretary, is groomed as his successor while Berlusconi could become the economy minister.