* Berlusconi tax-cut proposal the talk of Italy
* Many sceptical about source of alternative revenues
* Gap with leading centre left narrows in polls
By Philip Pullella
ROME, Feb 4 Silvio Berlusconi's rivals lampooned him as a snake charmer and a TV huckster selling pots and pans on Monday after he promised sweeping tax cuts if his centre right wins Italy's election this month.
The former prime minister launched his "last great electoral and political battle" on Sunday with a plan to reduce government spending, enact fiscal reform and what he called a "shock proposal" - reimbursing Italians for a much-hated tax on primary residences imposed last year.
Forced from power in 2011 after financial market turmoil that threatened to push Italy into a Greek-style debt crisis, Berlusconi has focused his comeback hopes on attacking the austerity policies of Mario Monti's technocrat government.
"Even an imbecile is able to invent new taxes and impose them on citizens but only an intelligent person can cut costs," Berlusconi said at a rally in Milan, the northern city where he made his media and real estate fortune.
But the day after, it was Berlusconi who was mercilessly derided by most newspapers and political opponents.
Corriere della Sera, Italy's leading paper, ran a cartoon depicting him dressed as a smiling joker in a carnival outfit throwing coins and banknotes to everyone in his wake.
Monti called Berlusconi "a snake charmer" and accused him of trying to sell "a dream even more fantastic than that in Alice in Wonderland".
Just about the only comfort Berlusconi found in the media was in a headline in Il Giornale, a newspaper owned by his family: "Finally, More Money".
The real estate tax, known as IMU, was imposed on primary residences last year by Monti to help with Italy's financial crisis, after it had been abolished in 2008 by Berlusconi.
It is estimated to have raised some 4 billion euros ($5.5 billion) last year, a sum Berlusconi dismissed as no more than 0.5 percent of the 800 billion euro annual budget.
He said he would scrap the tax at his first cabinet meeting and refund payments already made.
He promised to phase out a regional tax on businesses, reduce personal income tax rates, not hike value added tax (VAT) or impose a "wealth tax" on higher earners.
"This can work if alternative revenues are found," said Professor Fabio Marchetti, a tax expert at Rome Luiss university. "But I think it is rather utopian and demagoguery because it would make us the only country with no tax on primary residences."
Berlusconi was criticised even by former allies.
Giulio Tremonti, economy minister in the last Berlusconi government, said reimbursing the real estate tax "would objectively create a problem for public accounts."
Vittorio Feltri, a journalist who was for years the editor of Il Giornale, said: "If the state can't find the money to pay its suppliers or make tax refunds, where is it going to find the money to reimburse the real estate tax?"
Berlusconi said the money would come in part from striking a deal with Switzerland to tax financial activities there by Italian citizens.
"But a possible accord with Switzerland is still in stormy waters," said Professor Marchetti, adding that it could never be worked out before the new government takes office in April.
Berlusconi promised to save money by cutting government waste, halving the number of parliamentarians, and eliminating public financing of political parties. Income would come from new taxes on things he called "not of primary necessity" - tobacco, gambling and lottery tickets.
"Some people will buy into it and it certainly will have an effect on some people's voting intentions but the unknown is how much of an effect it can have," said Marchetti.
Most opinion polls indicate that the centre-left coalition, headed by Democratic Party secretary Pier Luigi Bersani, will win the Feb. 24-25 election. But the gap between the centre left and the centre right has narrowed steadily since Berlusconi returned to active politics. ($1 = 0.7301 euros) (Editing by Robin Pomeroy)