Coalition ally presses Berlusconi on tax cuts

The Northern League, Berlusconi’s main partner in the three-year-old government, wants more say on key policies as the prime minister’s popularity slips.

Berlusconi’s main candidates in mayoral elections were defeated last month and voters rejected some of his pet projects, including reviving nuclear power.

The credit ratings agency Moody’s warned late Friday that it might reduce Italy’s credit rating because of concerns about the country’s ability to spur growth and reduce its debt, one of the highest in Europe.

Standard & Poor’s has already cut its rating outlook for Italy’s debt from stable to negative and eurozone chief Jean-Claude Juncker warned yesterday that contagion from Greece’s debt crisis could spread to other European countries, including Italy.

Berlusconi’s finance minister, Giulio Tremonti, has been resisting tax breaks since Italy already slashed spending and cannot afford to lose revenue. But a Northern League official in Berlusconi’s Cabinet, Roberto Calderoli, pressed yesterday for tax changes now. Tremonti will reportedly present plans this month to balance Italy’s budget in three years.

League leader Umberto Bossi is expected to step up the pressure today at his party’s annual rally. Yesterday, he said the League would ask for several ministries to be transferred from Rome to his political strongholds in the north.