Berlusconi passes tax changes, ignoring parliament

The decision to approve the package to raise the taxation powers of town councils underscored the growing strength of the Northern League, Berlusconi's main coalition partner which had threatened to withdraw its support if the measures were blocked.

Pierluigi Bersani, leader of the largest opposition Democratic party, said it was "an unbearable slap in the face to parliament," while the centrist UDC called it "a vulgar and arrogant step which is totally illegal under the constitution."

The eagerly awaited vote of the 30-member parliamentary panel resulted in a 15-15 tie, dealing a setback to Berlusconi.

The vote of the committee on federalism, made up of lawmakers from both houses of parliament, was not formally binding, but it was widely considered that the centre-right government would have to take its verdict into account.

But after a hastily convened evening cabinet meeting, Northern League leader Umberto Bossi announced in a brief statement that the tax measures had been "definitively passed."

"The League keeps its promises and brings home a concrete result in the interests of the people," he said.

Bossi, who has the power to bring down the government, has promised his supporters a deal on the package aimed at increasing local autonomy and cutting subsidies from the prosperous north to the poorer south.

Ahead of the panel ruling, he said new elections would be needed if the measures were not approved, but the party's leadership has been divided over what approach to take and he appeared to backtrack later.

Following a second vote taken yesterday, when MPs rejected a search request by magistrates investigating allegations against Berlusconi of having sex with an underage prostitute, Bossi put off any suggestion of early elections. "The numbers are good, for now we'll carry on," he told reporters.