Berlusconi says Italy needs political stability

Reuters News
Posted: Sep 19, 2013 12:07 PM
Berlusconi says Italy needs political stability

By Roberto Landucci

ROME (Reuters) - Italy's center-right leader Silvio Berlusconi called on Thursday for political stability but demanded that Prime Minister Enrico Letta's fragile coalition keep promises to cut taxes, despite growing pressure on public finances.

The comments were the latest in a series of contradictory signals from Berlusconi, following repeated threats to bring down the government over issues ranging from tax policy to his own legal problems.

"A crisis at this moment would be destabilizing and stability is a good thing," Berlusconi said during the inauguration of the headquarters of his new Forza Italia party in his first public appearance in more than a month.

The 76-year-old media magnate has kept Italy on edge for weeks after Italy's top court convicted him of being at the center of a vast tax fraud scheme at his Mediaset television empire.

"We will stay in the government as long as it maintains its commitments," he said, citing the need to scrap a hated housing tax and eliminate a sales-tax increase scheduled to take place in October.

That demand points to the next likely dispute within Letta's fragile coalition of left and right as it seeks to reconcile demands for tax cuts with pressure to meet its European Union budget targets.

Scrapping the sales tax hike alone would require the government to find an additional 4 billion euros a year while the government is already struggling to keep the deficit within the EU's limit of 3 percent of GDP due to the dire state of the economy.

Official forecasts due on Friday are expected to point to a worsening outlook which would limit the scope for tax cuts.

Letta's fragile coalition of left and right, formed in the wake of last February's deadlocked election, has been at risk for months as Berlusconi's allies have repeated threats to pull out and force new elections.

On Wednesday, Berlusconi launched a furious tirade against judges who he said had tried to destroy him politically and suggested he was gearing up for elections by calling on Italians to join his Forza Italia party.

His conviction is expected to lead to his being stripped of his seat in the Senate and barred from running in the next election although he has vowed to stay in politics and lead his party from outside parliament.

(Reporting by Roberto Landucci; writing by Steve Scherer; editing by Ralph Boulton)