Tremonti gets 3rd chance as Italy economy minister
ROME (Reuters) - Giulio Tremonti, appointed Italy's economy minister for the third time, faces the daunting task of reviving a wilting economy, cutting the budget deficit and overseeing an ambitious overhaul of the tax system.
The bespectacled, 60-year-old former tax lawyer has been one of prime minister-elect Silvio Berlusconi's most trusted advisors ever since the media tycoon appointed him finance minister in his first government back in 1994.
Famous for his abrasive personality, frequent use of Latin and outspoken views against globalization, Tremonti is close to the populist Northern League and its fiery leader Umberto Bossi.
The League was a big winner in the April election which returned Berlusconi to power and demands that extensive taxation powers be devolved to Italy's regions.
Tremonti's many detractors point to a rise in the deficit and debt during Berlusconi's last government from 2001-2006 and say he fostered tax evasion by adopting a string of amnesties for tax dodgers.
Tremonti rebuts that he performed miracles in preventing far larger fiscal overshoots despite an international downturn during which "I never put my hands in the pockets of the Italians," meaning he never raised taxes.
He returns to office as Italy sinks into another deep downturn, with growth seen at little more than zero this year.
"Tremonti's appointment is not a signal that they want to go fast on deficit reduction," said Bank of America economist Gilles Moec.
That is unlikely to please the European Commission, which says Romano Prodi's outgoing government's target of a 2008 deficit of 2.4 percent of gross domestic product is too high and has urged Italy to speed up its fiscal consolidation.
ENEMIES
Tremonti has never been afraid to make enemies. He emerged victorious from a feud with former Bank of Italy chief Antonio Fazio, who was forced to resign in 2005 over a bank scandal, and has swapped barbs for a decade with the centre-left's former economy minister Vincenzo Visco, whom Tremonti famously dubbed "Dracula" for bleeding Italians dry through taxation.
Tremonti was forced to resign as minister in 2004 after cabinet colleagues complained that he refused to involve them in policy, only to be re-appointed by Berlusconi a year later.
Moec said Tremonti is likely to be more focused on revamping the tax system to transfer tax and spending powers to the regions than on worrying about public finances.
"It's hard to hold the deficit in check while you move from one system to another," he said.
Among his first tasks, Tremonti must find a buyer for Alitalia or allow the ailing national airline to go bankrupt, an option some commentators have suggested he favors.
In a sign that fiscal orthodoxy is unlikely to be a priority, Tremonti said in a controversial best-selling book published this year that the European Stability Pact's 3 percent of GDP deficit ceiling should exclude "all spending aimed at helping families," including welfare payments and tax benefits.
(Reporting by Gavin Jones; Editing by Jonathan Oatis)
