Silvio Berlusconi has promised to attack tax evasion in a bid to slash Italy's Budget deficit, but critics say the plan lacks credibility after four years of policies which have offered repeated pardons to tax dodgers.

Outlining the government's 2006 budget plans to trade unions on Thursday, the Prime Minister said it was time to crack down on the "worrying escalation" of tax evasion, which had reached "intolerable" levels.

Many observers were quick to note an about-turn in the government's priorities, while economists doubted that efforts to tackle what is a chronic, long-term Italian problem could be a quick fix to the burgeoning deficit.

"The government is being gradually pushed... into policies which it does not really favour, which poses a problem of credibility," said La Stampa daily in a front page editorial.

Since 2001 Mr Berlusconi has approved no less than 39 amnesties in which tax-shy citizens can settle their disputes with the authorities by paying up a limited sum.

The policy was widely attacked on ethical grounds and was criticised by the European Commission, which said Italy must focus on permanent, structural measures to cut the deficit.

It was also seen as counter-productive by those arguing it would encourage more tax evasion as citizens would continue not to pay their taxes in the belief that sooner or later a new amnesty would let them wipe the slate clean.

Mr Berlusconi's rhetoric has also appeared to justify tax evasion in the past, and the billionaire media tycoon has himself faced accusations of tax offences over the last decade although has never received a definitive guilty verdict.

A front-page cartoon yesterday in Italy's main daily Corriere della Sera showed Mr Berlusconi pledging "no more tax evasion" to himself as he looked at his reflection in the wardrobe mirror.

Last year he famously said it was not immoral to evade taxes if rates were too high, and in 2003 he told workers threatened with lay-offs at car-maker Fiat that they could solve their problems by finding a second "unofficial" job.

The government believes some 13.4 per cent of the workforce operates in the grey, untaxed economy and analysts have long urged the Italian treasury to crackdown on the wrongdoers.

Mr Berlusconi argues that lower fiscal pressure will make people more financially honest and last year cut income taxes. He has also controversially abandoned some taxes altogether. In 2001 he binned inheritance tax while in 2003 his government approved a law, ruling that owners of companies no longer needed to pay capital gains if they sold their shares.

Thanks to the legislation Mr Berlusconi was able to save some €225 million in capital gains tax when around 17 per cent of his family-controlled television company Mediaset was floated in April this year.

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