A row intensified in Italy on December 1 over the government’s proposal to raise the value added tax (VAT) on satellite television subscriptions. Critics cited the initiative as a move designed to favour the me - dia mogul premier which would essentially affect the main competitor to Prime Minister Silvio Berlusconi‘s media empire. The provision to double VAT from 10 to 20 percent was included in a economic crisis package unveiled by the conservative government on November 28.

Opposition leaders complained it highlighted 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 on December 1. He was referring to Sky Italia, which is a main player in Italian television along with Mediaset and state-broadcaster RAI.

Sky Italia, which controls some 92 percent of the satellite pay television market in Italy, is Berlusconi’s main competitor, Veltroni noted. 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 November 30, 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 - immediately 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 Euro a year per subscriber, Mockridge reminded.

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 Euro to the state in taxes. While Mediaset pay-television subscribers will also have to pay the higher VAT tax, observers pointed out that its revenues from pay-television are a faction of Sky Italia’s.