An Italian parliamentary committee dealt a blow to embattled prime minister Silvio Berlusconi today by blocking a tax measure his Northern League allies have laid down as a condition for staying in government.
The 30-member panel, which had to rule on measures to give more tax and spending powers to local governments, was split evenly, creating a stalemate with the potential to break the centre-right coalition and open the way to early elections.
Northern League leader Umberto Bossi, who has the power to bring down the government, has promised his supporters a deal on the package aimed at increasing local autonomy and cutting subsidies from the prosperous north to the poorer south.
Ahead of the ruling, he said that new elections would be needed if the measures were not approved, but the party's leadership has been divided over what approach to take and he appeared to backtrack later.
Following a second vote today, when deputies rejected a search request by magistrates investigating allegations against Mr Berlusconi of having sex with an underage prostitute, Mr Bossi put off any suggestions of early elections.
"The numbers are good, for now we'll carry on," he told reporters.
In formal terms, the committee's vote on the tax measures is not binding on the government, which has other means of passing a package that has already been through several modifications and is in itself only part of a wider federalism program.
However, the result has raised questions about how long the Northern League will stand by Mr Berlusconi, given that its solid regional base could give it a stronger position in a future centre-right government if a new election were held.
Ever since Mr Berlusconi's former ally Gianfranco Fini split from the ruling PDL party in July, the League has held the fate of the government in its hands and its importance has only risen after the sex scandal that has engulfed the 74-year-old premier.
Mr Berlusconi has resisted calls to resign over the scandal that has made a household name of "Ruby," the teenage nightclub dancer he is alleged to have paid for sex while she was under 18, the earliest legal age for prostitution in Italy.
He denies the accusations and received some backing today, when the lower house voted against letting magistrates search his accountant's offices, a result which helped swing Mr Bossi against a move for early elections.
Reuters