Rome - A row intensified in Italy on Monday over the government's proposal to raise value added tax (VAT) on satellite television subscriptions, a move that critics say targets the main competitor to Prime Minister Silvio Berlusconi's media empire. The provision to double VAT from 10 to 20 per cent was included in a economic crisis package unveiled by the conservative government on Friday.
Opposition leaders say it highlights the "conflict of interest" of Berlusconi, who heads the government while also controlling Italy's largest private television network Mediaset.
"This measure is meant as a way of hitting one company, Sky, which generates jobs," main centre-left opposition Democratic Party leader, Walter Veltroni, said Monday.
He was referring to Sky Italia, which is a main player in Italian television along with Mediaset and state-broadcaster RAI.
Sky Italian, which controls some 92 per cent of the satellite pay television market in Italy, is Berlusconi's main competitor, Veltroni said.
The tax hike would hit hardest "not rich families but football fans who bought Sky subscriptions and who will find the cost to have doubled," he added.
On Sunday, Berlusconi accused previous centre-left governments of "favouring" Sky Italia, and said his government's VAT increase proposal would also disadvantage Mediaset, which mainly broadcasts on open frequencies, but also includes a pay-television channel.
Meanwhile Sky Italia - a subsidiary of News Corporation, controlled by Australian-born media tycoon Rupert Murdoch - has launched a campaign inviting members of the public to e-mail the Italian government to protest against the VAT hike.
Sky Italia's CEO Tom Mockridge, said the "surprise" increase would affect Italian families already facing "difficult times."
Some 4.6 million households subscribe to Sky Italia in Italy and the doubling of VAT would mean an average increase of 50 euros (63 dollars) a year per subscriber, Mockridge said.
The provision also contradicted the Berlusconi government's pledge to help businesses to grow, the Sky Italia CEO added.
According to Mockridge Sky employs some 5,000 people in Italy, and contributes some 370 million euros to the state in taxes.
While Mediaset pay-television subscribers will also have to pay the higher VAT tax, observers point out that its revenues from pay- television are a faction of Sky Italia's.
