Bowing to mounting protests over arts cuts, Silvio Berlusconi’s government has suddenly decided to refinance Italy’s arts fund and abolish a €1 ($1.40) tax on movie tickets intended to support the film sector.

Culture czar Sandro Bondi has stepped down after long coming under fire for not lobbying hard enough against the deep cuts, which nearly halved the Fondo Unico Dello Spettacolo (FUS) arts fund to $326 million for 2011.

Bondi will be replaced by Giancarlo Galan, a former governor of the Veneto region with close ties to the Venice Film Festival. This bodes well for the Lido after the threat of a 40% cut to the fest’s budget.

The fund, which finances theater, opera, dance and film, has now been beefed up to $605 million, on par with last year.

Berlusconi’s cabinet pushed the decree through swiftly, averting a nationwide entertainment sector strike planned for Friday. The walkout would have shut down movie sets for a day.

However, the government is financing the arts fund increase with a tax on automobile gas, angering consumer advocacy groups.

Entertainment trade org Agis expressed its satisfaction that the government had scrapped the recently introduced tax on movie tickets, which would have forced exhibitors to shoulder the film subsidies burden.

But not everyone in Italy’s film community was cheering.

“Protests in past months have now forced the government to reintegrate the resources that represent the mere survival of the film sector, but certainly do not satisfy its real needs,” Italy’s National Film Auteurs Assn. said in a statement.”For years, we have been asking for a modern law centered on a tax that draws on all platforms that use film product. That is the only way for us to have the necessary resources for our sector, with no uncertainty, and to free the film industry from a dependency on politics.”