Italy's former prime minister Silvio Berlusconi has announced his "last great electoral and political battle" with a sweeping promise to cut taxes and the cost of government if his centre-right party wins elections this month.

Speaking at a rally in Milan, he disclosed what he had billed before the speech as a "shock proposal" – a promise to reimburse Italian families for a much-hated tax on their primary residences.

That tax, known as IMU, was imposed last year by outgoing prime minister Mario Monti to help with Italy's financial crisis, after it had been abolished in 2008 by Mr Berlusconi.

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In a passionate speech to supporters, Mr Berlusconi said he would scrap the tax and refund payments already made.

He also promised that a centre-right government would eliminate a regional tax on businesses over the course of five years, would not increase VAT and would not impose a so-called "wealth tax" on higher earners.

"I want to fight a last great electoral and political battle," he said.

Mr Berlusconi said part of the revenue to cover the elimination of the real-estate tax on primary residences would come from striking a deal with Switzerland to tax financial activities in that country by Italian citizens.

He also promised a number of measures to cut the cost of government, to halve the number of parliamentarians and to eliminate public financing of political parties.

Most opinion polls say the centre-left coalition, headed by Democratic Party secretary Pier Luigi Bersani, will win the election.

But the gap between the centre-left and the centre-right has been narrowing steadily since Mr Berlusconi returned to active politics.