Faced with a storm of protests, Silvio Berlusconi, the Italian Prime Minister and media tycoon, has defended a decision to raise VAT on subscriptions for satellite television stations, such as Sky Italia, as part of his Government's “anti-crisis” package.

The provision doubles the VAT from 10 per cent to 20 per cent. Mr Berlusconi said yesterday that Sky had been “unduly favoured” by previous centre-left governments, with which it had enjoyed a “privileged” relationship.

The Italian leader, whose Mediaset empire includes a pay-TV channel, said that the Left had “always enjoyed good relations” with Sky Italia, which is a subsidiary of News Corporation, parent company of The Times. He said that the VAT increase also penalised Mediaset and that, consequently, accusations of a conflict of interest were unfounded.

However, Tom Mockridge, the chief executive of Sky Italia, said that the increase not only affected Italian families already facing “difficult times”, but also contradicted a government pledge to help businesses to grow. In a statement quoted by Italian media, Mr Mockridge said that Sky not only employed 5,000 people in Italy, but also contributed €370 million (£305 million) a year to the State in taxes. Under the new measure, this would rise to €580 million, he said. About 4.6 million households subscribed to Sky in Italy and the doubling of VAT would mean an average increase of €50 a year per subscriber, he said, adding that the British Government was “going in the opposite direction” by reducing VAT.

Paolo Gentiloni, for the main opposition Democratic Party, said that the impact of the rise on Mediaset would be “negligible” since it did not affect Mediaset's system of prepaid digital cards for broadcasts of football matches.

Antonio Di Pietro, the former anti- corruption magistrate and head of the opposition Italy of Values party, said that the measure was scandalous. He said: “As usual, Berlusconi thinks only of looking after his own affairs instead of working for the interests of Italian citizens.”

Ignazio La Russa, the Defence Minister, who said that he was a Sky Italia subscriber, said that the broadcaster had enjoyed an anomalous “discount”, which was now being removed. Maurizio Sacconi, the Welfare Minister, said the move would not become law until parliament had approved it.

La Stampa said that at present Mediaset had 32 per cent of the Italian television market, while RAI, the public broadcasting network, had

34 per cent and Sky 30 per cent. The anti-crisis package would also hurt RAI by holding the annual licence fee at €106, the newspaper said.

Last week it was reported that Mediaset content would be broadcast via a Sky Italia satellite platform, Canale 123, starting this week. A spokesman for Sky Italia told Variety that the deal would give Sky Italia customers access to Mediaset's Canale 5, Rete 4 and Italia 1 channels. Mr Berlusconi's Fininvest holding company has also bought a 3 per cent stake in the German pay-TV channel Premiere, 25 per cent of which is owned by News Corp.

The anti-crisis “stimulus package” to help families and businesses hit by the global financial crisis amounts to €80 billion. However, economists say that most of this is accounted for by recycling funds already available, with “new money” amounting to €5 billion.

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Italian film makers have attacked the imposition of a 25 per cent duty on profits from films, shows and books that have an “explicit” sexual content as part of the Berlusconi Government's anti-crisis “stimulus package”. Dubbed a “porno tax” by the Italian media, it applies to works that contain “images or scenes depicting explicit sexual acts not simulated between consenting adults”. Sandro Bondi, the Culture Minister, is to decide what constitutes explicit or pornographic scenes. Tinto Brass, a director of erotic films, said that the tax was “devastating, disastrous. Obviously, they don't want people to have fun.”

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