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Berlusconi stays despite tax vote defeat

February 3, 2011

By Guy Dinmore in Rome, Published: February 3 2011

Silvio Berlusconi and his rightwing allies have suffered a damaging defeat in parliament over proposed changes to Italy’s tax system, which opposition leaders said confirmed the sense of a paralysed government undermined by corruption and sex scandals.

Despite the government’s failure to push an important piece of its legislative programme through a parliamentary committee on Thursday, the prime minister dismissed calls for his resignation or early elections.

All eyes were on Umberto Bossi, the unpredictable leader of the allied Northern League and minister for reforms in the coalition government, who had earlier threatened to bring down Mr Berlusconi’s government should it lose the vote on fiscal federalism, which has been a key priority for the league’s diehard regionalists from Italy’s richer north.

Opposition politicians said Italy – with growing unemployment, record high debts of €1,800bn and feeble economic growth – could ill afford a prolonged period of political stagnation.

“To go on with this non-existent majority for the next two years is political suicide for the country,” said Sandro Gozi of the centre-left Democratic party, noting that Mr Berlusconi’s fate rested with Mr Bossi.

However, after talks with Mr Berlusconi and party bosses, Mr Bossi said he did not think elections were likely after all.

But he added that events also depended on a separate vote over “Rubygate”, as Italy has come to call the latest investigation into Mr Berlusconi’s relations with suspected prostitutes.

In the end, the government’s slim majority prevailed after a fierce debate in the lower house, with the coalition ignoring demands by the opposition that Mr Berlusconi defend himself “in court and not from the courts” and rejecting a request by prosecutors to search his offices in Milan.

The premises are suspected to have been used by his accountant to manage payments to alleged prostitutes, including an underaged Moroccan with the stage name of Ruby.

“If you are as innocent as you insist, why don’t you open the doors to the investigators?” Dario Franceschini, parliamentary leader of the Democrats, asked. “You have exposed our country to the ridicule of the world,” he added.

Defending the 74-year-old prime minister against deputies shouting “bunga bunga” – as his allegedly erotic party games were known – Maurizio Paniz of the centre-right People of Liberty party said magistrates had disgraced themselves over 17 years of failed attempts to delegitimise Mr Berlusconi in a politicised witch-hunt.

Mr Berlusconi is also accused of abuse of office in persuading a Milan police chief to release the Moroccan teenager from custody last May. He rejects the accusations.

Whether they search the billionaire prime minister’s offices or not, prosecutors said they intended to present their case to a preliminary judge next week.

Mr Berlusconi already faces the resumption of two separate trials on charges of corruption and tax fraud involving his media empire. He denies the charges.

The municipal tax legislation that was blocked on Thursday when the bicameral committee split by 15 votes to 15 is part of the government’s fiscal federalism programme.

Mr Berlusconi still has the option of putting the bill to a full vote although his slender majority, following the defection of party rebels last year, makes the outcome uncertain.

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