Italy's Berlusconi revives tax amnesty proposal

Former Italian prime minister Silvio Berlusconi has revived proposals for a sweeping amnesty on unpaid taxes and building permit violations as he tries to gain ground on the centre-left ahead of elections on February 24-25.

The pledge follows Berlusconi's eye-catching promise to scrap a hated housing tax imposed by the technocrat government of outgoing Prime Minister Mario Monti and reimburse last year's payments.

The last opinion polls published before a pre-election blackout showed Berlusconi's centre-right alliance trailing almost 6 points behind the centre-left in the overall vote.

"If voters give a majority to me and my People of Freedom party alone, I will immediately pass a full tax and building amnesty," he told a talk show on RAI state television late on Friday.

Tax amnesties have been passed regularly by successive Italian governments but have been widely criticized as an encouragement to tax evasion, a chronic problem that has contributed to creating Italy's massive public debt.

A similar tax amnesty proposal was rejected last week by Berlusconi's coalition partners in the pro-devolution Northern League party and there has been no sign that they have changed their stance, as Berlusconi himself acknowledged implicitly.

"If I have to deal with the others we will see how things go," he said.

Media magnate Berlusconi has sharply eroded the centre-left's lead in the last month. While most experts believe it is too late for him to catch up, key regional battles could produce a hung result in the Senate.

That brings the risk of stalemate or could force the centre-left to seek a potentially unstable alliance with Monti's centrist bloc.

Berlusconi has brushed aside criticisms that his proposals would hamper efforts to cut the public debt, which at over 126 percent of gross domestic product is second only to Greece in the euro zone.

He has said that the extra cash brought into the economy by repaying the IMU housing levy and cutting other taxes would stimulate growth sufficient to start bringing down the debt.

(Reporting By James Mackenzie; Editing by Rosalind Russell)