Berlusconi vows to cancel property tax on Day 1

[January 26, 2013]  ROME (AP) -- Silvio Berlusconi is vowing to scrap Italy's property tax in his first Cabinet meeting if his coalition is elected, zeroing in on Italians' deep distaste for the tax re-imposed by Mario Monti's government in a bid to boost public coffers.

The former premier outlined his latest "contract" with Italians on Friday as he pressed his comeback bid, promising a host of reforms, incentives and measures to give relief to Italians suffering through a deep recession and youth unemployment at a record 37 percent.

The 76-year-old Berlusconi's voice was strained, and by the end of his hour-plus monologue his hands were shaking and he slumped into his seat afterward. But his press office quickly denied any problem, saying he was merely tired after a strenuous performance.

Berlusconi started the program on the stage with Angelino Alfano, his heir-apparent and stated candidate for premier if his center-right coalition wins the Feb. 24-25 vote. Alfano took the podium for a bit, but Berlusconi returned for a solo finale to list his previous governments' accomplishments and outline the program for a future center-right government, again raising questions about whether he or Alfano is really the main candidate.

Berlusconi's People of Freedom party and its allies are currently trailing the center-left in polls some 27 percent to 38 percent. Monti's civic movement is garnering about 14 percent.

Monti was tapped by Italy's president to lead the country after Berlusconi was forced to resign in November 2011, under pressure from financial markets that had lost faith in his ability to push through reforms to reduce Italy's public debt and enact financial reforms.

Under Monti's leadership and thanks to the European Central Bank's bond-buying program, Italy's borrowing costs have come down. But ordinary Italians have grown disillusioned with the tax hikes and other austerity measures amid recession and rising unemployment.

Berlusconi blamed Monti's reinstatement of the tax on primary residences for Italy's spiral into recession, claiming it had decreased property values, reduced spending by ordinary Italians, slowed housing sales and seriously harmed the construction industry.

"Let's have a look at the damage that an untimely tax can do," Berlusconi said.

In truth, Italy's construction industry has been suffering throughout the economic crisis, which long predates the imposition of the property tax. A study by nationwide realtors group Tecnocasa said housing prices dropped around 5 percent around major cities and their suburbs last year, but there was no indication that the property tax was to blame: Tecnocasa cited tougher financing in the economic crisis and concerns about job security. It said there was no immediate impact on the purchases of primary residences.

Berlusconi came to power in 2008 after a last-minute campaign promise to remove the property tax, which he abolished in his first Cabinet meeting. On Friday, he promised to do the same if his coalition wins.

Monti had originally defended the tax as necessary and reasonable given that most of the developing world imposes one. But now that he is campaigning, Monti has said he would be open to revisions.

[Associated Press; By NICOLE WINFIELD]

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