Italy centre-left counters tax cut promises with spending pledge

ROME Mon Feb 4, 2013 7:00pm EST

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ROME Feb 4 (Reuters) - The head of the centre-left coalition leading polls three weeks before Italy's parliamentary election promised on Monday to spend 7.5 billion euros on public services if elected.

Pier Luigi Bersani made his promise one day after his conservative rival, former prime minister Silvio Berlusconi, said he would cut taxes and re-pay a hated housing tax to Italians.

"My proposal is to invest 7.5 billion euro ($10.17 billion)in investments over three years to rebuild schools and hospitals and on some environmental projects," Bersani in a television interview.

Either pledge may prove difficult to fulfil given Italy's large debt and prolonged recession.

But there is little appetite for more austerity after a year in which the technocrat government of Mario Monti hiked taxes and slashed spending in an attempt to ward off a debt crisis that threatened the euro.

Bersani took aim at Berlusconi's promise.

"I could also get headlines by promising to refund honeymoons, but I'm don't intend to," the candidate said in an interview in which he sought to present himself as the 'serious' candidate in contrast to Berlusconi's colourful style.

Berlusconi's centre-right coalition has 28.6 support versus the centre-left's 34.7, according to an IPR survey. The gap has narrowed in recent weeks.

The media mogul resigned as prime minister in November 2011 as Italy's borrowing costs became unsustainable and he was replaced by economics professor Monti.

Monti is running for a second term as the head of a centrist coalition polling 14 percent, according to the IPR survey. Monti has also promised some concessions on tax, a reflection of widespread fatigue with austerity measures.

Bersani, head of the Democratic Party which forms the largest bloc in the centre-left coalition, said he would find funds for the project through cuts to defence and rearranging existing spending.

The Democratic Party is also battling criticism over a scandal involving derivatives losses at Monte dei Paschi di Siena, a bank with which the party is linked.

In the interview Bersani said he thought the case might at worse turn out to involve false accounting and tax shields as well as the derivatives losses, and said he supported separating politics from banking. ($1 = 0.7376 euros) (Reporting by Naomi O'Leary; Editing by Angus MacSwan)

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