Berlusconi Touts Tax Cuts and Fewer Lawmakers in Election Race

Silvio Berlusconi promised to abolish Italian property tax on the first house and reimburse the amount paid last year as he seeks to build on his gains in opinion polls ahead of parliamentary elections this month.

Imposing the so-called IMU tax on the first house marked “the act that originated the crisis, spreading concerns and fear for the future across families,” Berlusconi said today at a press conference in Milan televised on Sky TG24.

Berlusconi is promising economic stimulus and fighting for a relaxation of the European Union’s budget rules if Italians give him what would be his fourth electoral victory in the Feb. 24-25 ballot. The message has resonated with voters who are weary of recession and the fiscal austerity implemented by Prime Minister Mario Monti.

“Austerity in Europe has been imposed by Germany and led to 50 million unemployed or under-employed,” Berlusconi said at a press conference Feb. 1. “We must have this showdown with Germany. Otherwise the reality will force many countries, one after another, to exit the euro.”

Berlusconi, Italy’s former prime minister, said he would abolish the IMU on the first house in the initial cabinet meeting following elections as an “act of peace” that would allow for a new start. Reimbursement of the amount paid in 2012 will occur in cash or through current account and will be concluded within a month, he said.

‘Good Memory’

“Berlusconi never kept a promise, Italians have a good memory,” Prime Minister Mario Monti said in an-emailed statement following Berlusconi’s press conference today.

The IMU abolition, valued at about 4 billion euros ($5.5 billion), will be covered through an agreement with Switzerland with regard to taxation of financial activities in Switzerland by Italian citizens, Berlusconi said. Such an agreement will translate into proceeds of as much as 30 billion euros plus 5 billion euros a year when at full capacity, he said.

Berlusconi, 76, has gained on front-runner Pier Luigi Bersani, closing the gap to 5 percentage points in an SWG Institute survey last week. Support for Berlusconi’s center-right coalition rose 1.3 points in a week to 27.8 percent, while Bersani’s center-left block fell 1.6 points to 32.8 percent, according to the SWG poll released on Feb. 1. SWG reported 30 percent of respondents as undecided or abstentions.

Berlusconi, the most successful politician of his generation, won the 2001 elections by making tax reductions a centerpiece of his “Contract with Italians,” a list of promises he signed on national television.

Corporate Tax

The abolition of the IMU on the first house will be coupled with the reduction and then the removal of IRAP regional corporate tax over 5 years, Berlusconi said today, adding that no increase in VAT or introduction of property tax are planned.

Berlusconi said he would also tackle ways to cut cost of politics, cutting by half the numbers of parliament members and abolishing public financing for parties.

Berlusconi has gotten a boost from his appearances on television and an accounting scandal at Banca Monte dei Paschi di Siena SpA that has tainted Bersani’s Democratic Party. Berlusconi, a billionaire, has also used his wealth to build support. He signed Mario Balotelli to his AC Milan soccer club, bringing the 22-year-old Italian hero in last year’s European Championships back to his country after two years in the U.K.

Bersani’s Democratic Party has been hurt by its ties to Monte Paschi, according to SWG. The Democratic Party controls the bank’s biggest shareholder through its dominance of local politics in Siena, where Monte Paschi is based. Half of voters assign blame to the Democratic Party for Monte Paschi’s accounting irregularities, SWG said.

Berlusconi was sentenced to four years in prison in October for tax fraud and remains free pending appeal. The unrelated sex-with-minor trial includes an abuse of power charge, and Berlusconi has denied all wrongdoing.