The political economy of Berlusconi's tax-benefit policy: rhetoric or reality?

The aim of this article is to shed light on Berlusconi’s political strategy to reshape the state by examining some of the incentives for discretionary changes in the tax-benefit system during his administrations. We argue that by exploiting the typically categorical and fragmented nature of the Italian welfare system, Berlusconi’s governments engaged in the ‘art of manipulation’ within the tax-benefit framework, reflecting his efforts in social engineering to forge new electoral alliances. It is well established that redistributive programmes are the outcome of intense political decision-making, as they create redistributive advantages among different social groups. This article contends that, under the guise of economic liberalism, the Berlusconi governments devised redistributive strategies aimed at constructing new social constituencies to bolster and legitimize his dominant position. Although his governments promised a pact of ‘From Decline to Growth’ for all through tax-benefit redistribution, they ultimately introduced only incremental changes rather than long-term structural reforms. In conclusion, Berlusconi’s neoliberal ‘revolution’ was more rhetoric than reality