Italy's Berlusconi revives tax amnesty proposal

ROME (Reuters) - 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.