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Berlusconi unveils ‘shock proposal’ on tax cuts

Italy's former prime minister Silvio Berlusconi attends a news conference at the People of Freedom Party (PDL) headquarters in Rome February 1, 2013.

Alessandro Bianchi/Reuters

Italy's former prime minister Silvio Berlusconi announced his "last great electoral and political battle" on Sunday with a sweeping promise to cut taxes and the cost of government if his centre-right wins elections this month.

In a passionate and much-anticipated speech to supporters in Milan, the city where he built his fortune, he said only his centre-right could lift Italy out of the dark fog of recession and re-establish trust between government and citizens.

His political opponents were quick to deride him. Caretaker Prime Minister Mario Monti said Mr. Berlusconi "has never kept any of his promises" and one centre-left parliamentarian called the speech "a laundry list of stupidities." The centrepiece of Mr. Berlusconi's fiery speech was the unveiling of what he had billed beforehand as a "shock proposal" – a promise to reimburse Italian families for a much-hated tax on their primary residences.

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He also promised a centre-right government would eliminate a regional tax on businesses over the course of five years, reduce personal income tax rates, would not increase the value-added tax and would not impose a so-called "wealth tax" on higher earners.

"I have nothing to ask for myself," said Mr. Berlusconi, 76, one of Italy's richest men. "I want to fight one last great electoral and political battle."

Gianfranco Fini, the Speaker of the lower house of parliament who broke with Mr. Berlusconi in 2010, tweeted that in his second cabinet meeting, Mr. Berlusconi would "decree that everyone wins the lottery."

Mr. Berlusconi took simultaneous swipes at both Mr. Monti's centrist coalition and the center left, saying: "I want to help Italy get out of this dark atmosphere the technical tax men have put it in, and in which the tax men of the left will leave it mired."

Italy is deep in recession. Last month the central bank forecast that GDP will fall 1.0 per cent this year rather than the previously forecast 0.2 per cent. Unemployment is seen climbing from 8.4 per cent in 2011 to 12 per cent by 2014.

One candidate running for Mr. Monti's centrist group called the speech tantamount to "vote-buying," and Rosy Bindi, president of the center-left Democratic Party, slammed it as "dangerous electoral propaganda."

Mr. Berlusconi said revenue to cover the elimination of the real estate tax on primary residences would come in part from striking a deal with Switzerland to tax financial activities there by Italian citizens.

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He also promised a number of measures to cut the cost of government, to halve the number of parliamentarians, to cut government waste, and to eliminate public financing of political parties.

Most opinion polls indicate that the center-left coalition, headed by Democratic Party Secretary Pier Luigi Bersani, will win the Feb. 24-25 election.

But the gap between the center left and the center right has been narrowing steadily since Mr. Berlusconi returned to active politics. On Sunday even La Repubblica, a left-leaning paper, ran an editorial headlined: "If Berlusconi's horse wins the race."

Mr. Berlusconi told cheering supporters: "We think we are close to an historic result. Simply put, we are sure we are going to win."

The media magnate, who stepped down in November 2011 when Mr. Monti's technocrat government was installed to lead Italy out of a full-blown economic crisis, will not be prime minister again if the centre right wins.

That job will go to Angelino Alfano, secretary of Berlusconi's People of Freedom party.

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Mr. Berlusconi had said earlier that he would be the economy minister in a centre-right government. In his speech on Sunday, he said he would be both economy minister and industry minister.

"That is, if Angelino Alfano reconfirms his trust in me," joked Mr. Berlusconi, who has been the voice and face of the center-right campaign, often leaving Mr. Alfano in his shadow.

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