Berlusconi returns to politics, attacks Monti government
* Berlusconi promises to abolish property tax
* Returns after months in the background
* Polls show Italians disillusioned, undecided how to vote
By Barry Moody
ROME, Sept 17 (Reuters) - Former Prime Minister Silvio Berlusconi has returned to the political frontline after months in the shadows, vowing to abolish a key tax on homes in remarks likely to stoke investors' jitters about Italy's future after an election next spring.
But the 75-year-old media magnate is keeping Italy guessing about whether he will stand for prime minister at the head of his centre-right People of Freedom (PDL) party in the election.
Berlusconi, one of the country's richest men, attacked the policies of his successor, unelected technocrat Mario Monti, in his first interview to Italian media since being forced from power last November, when Italy tottered on the edge of a Greek-style debt crisis.
Berlusconi said in the interview with his family's il Giornale daily that the PDL would abolish a deeply unpopular tax on homes worth 20 billion euros a year, which is a major plank in Monti's tough austerity programme to cut Italy's huge debt.
The former European Commissioner has restored Italy's credentials since he took over from the scandal-plagued Berlusconi at a time when a loss of confidence had pushed the country's borrowing costs to untenable levels.
Berlusconi, who has remained out of the limelight for months, said the tax on the owner of every house in Italy must be repealed in the same way his government abolished a previous levy in 2008. Avoiding property taxes has been a constant theme for Berlusconi who dominated Italian politics for 17 years until his fall last November.
"The home is a pillar on which every family has the right to base its security for the future," he said in the interview conducted on a cruise down the Adriatic coast over the weekend for Giornale readers, and published on Monday.
Berlusconi, whose party has slumped in popularity since he left power, said he wanted to see which electoral law would be used before deciding whether to stand in a poll which must be held by next April.
He failed to turn up on Friday for a Rome rally at which many supporters hoped he would throw his hat in the ring. Senior party officials have repeatedly predicted he will be their candidate.
Uncertainty over how to change the voting system - so bad it is universally called the "pigsty law" - is at the centre of Italy's instability ahead of the elections, with the parties in turmoil and under threat from populist movements.
An opinion poll published by the Corriere della Sera daily on Sunday showed two-thirds of Italians, suffering in a deep recession and fed up with traditional parties, were undecided how to vote or intended to abstain or cast a protest ballot.
Only 36 percent intended to vote for a mainstream party.
The uncertainty has unsettled investors who are worried that a new political government could tear up Monti's unpopular reforms and plunge the euro zone's third largest economy back into crisis.
Berlusconi attacked Genoese comic Beppe Grillo, whose anti-establishment Five Star Movement is snapping at the heels of the weakened PDL, saying his support would evaporate when the public realised he was incapable of governing even a small city.
"Grillo is an extraordinary comic actor....And what is he doing now? He is doing exactly the same trade as before."
In remarks that may be aimed at sowing confusion in the centre left Democrat Party, Berlusconi praised young Florence major Matteo Renzi who is challenging party leader Pier Luigi Bersani in electoral primaries expected in November.
Berlusconi said Renzi, on the rightwing of the party, was pursuing exactly the same policies as the PDL and would transform the PD from a communist into a social democrat group.
A new IPR poll published on Monday showed that whereas Monti's popularity had increased by three percent to over 50 percent - way above the political leaders - the rating for his ministers and overall government had fallen by about the same amount.
Many business leaders are pushing for Monti to come back as prime minister after the election, even though he says he is not available. One party, the centrist UDC, is campaigning on this proposal.
A suggested alternative for the foundering politicians is to have one of Monti's technocrat ministers stand for prime minister, but the popularity of the leading candidate, Industry Minister Corrado Passera, fell by two points to 46 percent in the poll.