Rome – Italy has approved a controversial porn tax to stop its finances straying into the red while helping working families .

The earnings of porn superstars at the internationally successful Diva Futura porn factory – the stable that gave the world ’80s porn divas Cicciolina and Moana Pozzi – will be among the hardest hit by the 25% tax .

The company run by billionaire Riccardo Schicchi, ex-husband of hardcore-sensation-turned-TV-celebrity Eva Henger, has been among the most vocal in decrying the tax as discriminatory and “an unacceptable infringement on freedom of expression” .

Other stars like ‘Italian Stallion’ Rocco Siffredi – still at 41 by far the most bankable male performer – have threatened to take to the streets to protest the measure .

“The government has declared war on sex,” says the high-profile actor, who has taken part in two non-porn films and says he wants to spend more time with his family .

Jessica Rizzo, a semi-retired star whose adult empire rivals Schicchi’s at the pinnacle of Italy’s 40 production houses, reckons the tax will raise costs to consumers of videos and magazines “by 30-50 percent.” The government has taken the moral high ground by saying the tax will discourage porn consumption and pay for family-friendly policies like tax breaks on babysitters, handouts to families that have babies and workplace creches .

“And it’s better to tax porn outfits than not-for-profit organisations like workers’ cooperatives,” one official added .

But industry insiders claim the taxman just wants a chunk of a multi-million-euro business .

Italy puts out some 400 adult films a year and has more than 2,500 sex shops .

Like Schicchi, Rizzo is one of the handful of entrepreneurs who provide the full package: films, videos, a satellite channel, magazines, sex chat lines, lingerie, toys, erotic aids, nightclub appearances by celebrity performers and even sex seminars for Italians worried about their own performance. The tax is a key late addition to the 2006 budget. It was originally put forward by the rightwing National Alliance party (AN) .

The budget aims to keep Italy’s deficit as close as possible to European Union limits .

The porn tax is applicable to all revenue from the production, distribution, sale and projection of hard-core materials .

In a surprise move that may spark the most controversy, sex aids and toys such as inflatable dolls and vibrators have been lumped in with the porn videos and mags .

Government sources said the tax may even apply to sadomasochistic gear .

VAT, at 10%, will be applied for the first time to subscriptions for satellite TV porn channels such as Rupert Murdoch’s Sky Italia per-pay-view offerings .

It was not immediately clear whether soft-core work, a poor relation to Italy’s thriving hard-core business, would also be affected .

A tax on so-called Spaghetti Porn has been mooted before – once by AN to fund scientific research and once by the populist Northern League to pay for regulating brothels .

Daniela Santanche, the AN MP promoting the latest plan, says the tax could pull in as much as 220 million euros .

Santanche has denied accusations that it is “an AN tax,” pointing out that it was OK’d by Premier Silvio Berlusconi’s entire coalition .

She also stresses that there is a very similar tax in France .

According to a report released by the Eurispes research institute earlier this year, Italy’s pornography industry now has an annual turnover of 1.1 billion euros .

That figure is said to be rising at a rate of about 10% a year, making the industry one of Italy’s most resilient, even though experts note it is still far smaller than Germany’s or Spain’s .

Italy has a commitment with the European Union to bring down its budget deficit to 3.8% of GDP in 2006. A recent European Commission report forecast that the deficit would be 4.2% unless further measures are taken .