Prime Minister Silvio Berlusconi was forced to declare publicly his faith in the Economy Ministry on Wednesday as his government faced ridicule from the press and opposition over its failure to pin down tax cuts. Berlusconi last week renounced long-promised plans to cut income taxes in 2005 because his Economy Minister Domenico Siniscalco could not find sufficient funds to cover the move, putting back the concession until 2006. Looking to deflect criticism over the U-turn, the government vowed instead to come up with a series of tax breaks for firms and families within 48 hours, but has yet to deliver.
Newspapers have reported that Berlusconi was livid with the ministry for failing to find the financial cover for the tax cuts, which he has been promising since he took office in 2001, and said he tore up treasury documents in fury on Tuesday.
But in a statement, Berlusconi's office said the prime minister "had expressed his full confidence and appreciation for the technical structures of the Economy and Finance Ministry", adding that he had never spoken ill of the ministry.
The brief statement also denied a report in the Corriere della Sera newspaper that the prime minister had hired outside advisers to check the Economy Ministry's sums.
It was the second time in two days that Berlusconi has had to openly back the ministry and its staff.
On Tuesday, the prime minister told reporters he had "excellent relations" with Siniscalco, who has no political affiliations and is viewed as a technocrat.
Berlusconi's vote of confidence in the Economy Ministry came as the lower house of parliament approved Italy's 2005 budget.
Approval came faster than expected because the centre-left opposition withdrew all its amendments, saying the bill was an empty shell without the long-awaited tax cuts.
"The chaos that is continuing within the ruling majority is damaging for the country and for parliamentary debate," said Luciano Violante, the parliamentary leader of the largest opposition party, the Democrats of the Left.
Berlusconi originally promised 6 billion euros of tax cuts for 2005. However, the Treasury warned this would force Italy to break European Union deficit limits and instead offered some 3.7 billion euros of tax breaks for some firms and families.
The prime minister wants a bigger package, and one political source said he had not lost all hope of pulling a rabbit out of the hat and presenting some sort of income tax cut.
The budget now moves to the Senate for approval at which stage the government will have to introduce the tax amendments. The package will have to return to the lower house for a further reading by the end of the year before the bill can become law.
The budget bill contains deficit cutting measures worth around 24 billion euros, aimed at reducing the public deficit to 2.7 percent in 2005 from a targeted 2.9 percent this year.