ITALIAN MEDIA mogul and prime minister Silvio Berlusconi last night appeared to be reconsidering the terms of a proposed tax increase on Rupert Murdoch's Sky Italia pay-TV operations.

Faced with a barrage of Sky customer complaints, Mr Berlusconi appeared to be having second thoughts on the matter saying, while in Albania for bilateral talks, that he might be willing to change the measure.

The controversial tax hike, which calls for the doubling of VAT to 20 per cent on satellite pay-TV subscriptions, forms part of an emergency fiscal stimulus package passed last Friday.

Opposition figures immediately accused Mr Berlusconi of a grave conflict of interests, arguing that the proposed new measure would not hurt his own commercial, free-to-air television empire but rather that of a major competitor, Sky Italia, which controls 91 per cent of the Italian pay-TV market.

Mr Berlusconi rejected these criticisms, pointing out that the measure would also penalise his own Mediaset Empire. He said that Sky had been benefiting from a lower VAT rate, "thanks to its good relations with the left", implying that the 10 per cent rate had been fixed under a centre-left government.

Media analyst Fabrizio Peretti argued that the new measure would not affect Mr Berlusconi's own television channels, since Mediaset's output is either free to air or via a digital terrestrial pay- TV service.

Sky Italia chief executive Tom Mockridge pointed out that the satellite pay-television rate had been established in 1995 by the government of Lamberto Dini, a former finance minister under Mr Berlusconi and currently a senator in his People of Freedom (PDL) party.

Senior Democratic Party (PD) figure Fabrizio Morri suggested Mr Berlusconi had pulled off another first, saying: "In the whole world, only Mr Berlusconi would say that Murdoch's television is a friend of the left."

Faced with a tax hike that will inevitably be passed on to its 4.6 million subscribers, Sky Italia reacted aggressively, calling on subscribers to send an e-mail of complaint to the government's website. The strong response temporarily jammed the site.

Throughout his 14-year career in politics, Mr Berlusconi has never been shy about using his own channels to promote his own ideas and initiatives. Sky would seem to have taken a leaf out of Mr Berlusconi's own book.