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A surprise promise from Silvio Berlusconi to abolish a major property tax rebounded on the Italian premier on Tuesday as his centre-left opponents ridiculed it as a transparent pre-election gimmick.

“What will Berlusconi be promising on April 7 in his final election appeal? A yacht for everybody? The moon?” asked Alfonso Pecoraro Scanio, leader of the opposition Greens party.

Mr Berlusconi made the promise at the end of a televised debate on Monday night in which he attacked Romano Prodi, his challenger, as an inveterate raiser of taxes and portrayed himself as a tax-cutting visionary.

Mr Berlusconi is fighting for his political life in next Sunday and Monday’s ballot, with recent opinion polls suggesting his centre-right coalition has failed to close a gap with the opposition that has lasted for more than a year.

The premier repeated on Tuesday that he would abolish the property tax on Italians’ first homes, even though such a promise forms no part of his coalition’s official manifesto and his announcement clearly took aback some of his colleagues.

The tax on primary residences brings in about €2.3bn a year and is an important source of revenue to local governments, which use it to finance public services.

Mr Berlusconi told reporters that it would be easy to find the funds to cover the tax reform. “It would be €2.3-2.5bn. That’s small change. We can easily find other sources of revenue,” he said.

Mr Prodi was scathing in his criticism. “There is no way the voters will believe in such fibs,” he told Sky TG24 television.

“It was a desperate attempt to claw back an evening that had seen Romano Prodi clearly prevail,” said Piero Fassino, leader of the Democrats of the Left, the largest opposition party.

“The premier made a silly remark at the last minute, when he couldn’t be asked how he intended to pay for the cut... But today Berlusconi owes an explanation to Italy’s 8,000 mayors, who want to know where the money will come from for public services such as day care, the elderly and roadworks.”

The controversy over Mr Berlusconi’s announcement offered a welcome respite for the centre-left, which has been under pressure to explain how it intends to fund the boldest proposal of its own election programme.

They propose a €10bn plan to slash payroll taxes by 5 percentage points in Mr Prodi’s first year of office. One aim is to boost domestic demand by increasing workers’ take-home pay, which Mr Prodi said in Monday’s debate would rise under his plan by €500-600 a year.

The other aim is to cut employers’ costs and increase Italy’s business competitiveness, which has been ravaged in the past 10 years by rivals in China, south Asia, eastern Europe, Turkey and other places.

Mr Prodi says the reduction in labour costs will be covered by capping public expenditure, cracking down on tax evasion and raising capital gains tax on some classes of bonds and equities.

But several former government ministers, on both the centre-right and centre-left, said privately that they had discovered in office that it was far easier in Italy to announce public spending cuts than to enforce them.

Vast networks of special interests, from subsidised companies to local government agencies and millions of state pensioners, act as a barrier to cutting public expenditure, they said.

World financial markets and bodies such as the International Monetary Fund are urging that the next government get a grip on the public finances, because Italy’s debt is more than 106 per cent of gross domestic product and last year’s budget deficit was 4.1 per cent of GDP.

Yet each side in the election campaign is emphasising its spending promises. Mr Berlusconi is promising to raise the monthly old-age pension to €800 from €550, and Mr Prodi is proposing new credits for children up to the age of three.

Copyright The Financial Times Limited 2017. All rights reserved.
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