Italy’s Coalition Near Collapse as Berlusconi Allies Threaten to Walk Out

The former prime minister’s supporters oppose planned tax increases.

Italy’s ruling coalition seemed on the brink of collapse Friday as conservative lawmakers from former prime minister Silvio Berlusconi’s party threatened to block a budget plan and resign if their leader is voted out of the Senate next month.

Prime Minister Enrico Letta, having just arrived back in Rome after a United Nations General Assembly meeting in New York, recognized in a statement that, “Efficient government action is obviously incompatible with the mass resignation of a parliamentary group which should support the government.”

“Either there is a new start and the interests of the country and its citizens are put first or this experience is at an end,” he said.

Letta’s Social Democratic Democratic Party was forced into a coalition with Berlusconi’s party after elections in February gave neither the left nor the right a mandate to govern with its traditional allies.

Berlusconi had fought the campaign on repeal of an unpopular housing tax that was introduced by the last government, led by the former European commissioner Mario Monti. To compensate for the €4 billion the housing tax was supposed to raise, prevent the sales tax from rising another percent and avoid breaking the European Union’s 3 percent deficit limit, Letta’s cabinet introduced a service tax on utilities and proposed to increase fuel duties. The right is strongly opposed to especially the second plan.

“We can’t accept the blame for this,” Deputy Prime Minister Angelino Alfano, who is also the party’s secretary, reportedly told ministers. “We can’t stay in the government if taxes are going up and there are no cuts to spending.”

The budget dispute coincides with efforts to eject Berlusconi from the Senate. Technically, the former prime minister and business tycoon is not allowed to remain a member after he was convicted of corruption and tax fraud in two separate cases. Conservative party lawmakers have appealed to President Giorgio Napolitano to grant him amnesty but in an unusually stern statement released earlier this week, the octogenarian leader rejected as “absurd” Berlusconi’s claims of a judicial coup and urged his supporters to “find a way to express their political and human support for their party president without threatening the work of two branches of parliament.”

If the right pulls its support from Letta’s government, Napolitano could either call new elections or try to put together another coalition.

Opinions polls suggest reelections would change little in the balance of power while the anti-establishment Five Star Movement, which has the votes to give Letta and his allies a majority in the upper chamber, is critical of politics as usual and reluctant to join either major party in a coalition.