Media have reported that City, the richest club in the world, are willing to pay the 2007 Ballon d'Or winner and FIFA world player of the year 500,000 pounds ($746,000) a week.
"Nothing has been decided yet, but it's very hard to make someone stay who is going to earn certain figures," Italian Prime Minister Berlusconi was quoted as saying by La Gazzetta dello Sport's website.
"Naturally, I'd be sorry if he left. At the moment, I'm not informed of the results of the negotiation."
Milan's in-house TV channel said this week that the Serie A outfit were considering an offer after chief executive Adriano Galliani met officials from the Premier League club on Tuesday.
"It's difficult to say no to a lad who has a career that is not for his whole life and has earning prospects much higher than now," Berlusconi said.
"We cannot raise his salary, which is already at the maximum level. We would have to raise everyone's and frankly that is not possible. But I hope he remains."
Berlusconi compared Kaka's situation to that of Andriy Shevchenko, who returned to seven-times European champions Milan this season after being lured away by Chelsea in 2006.
"(I want to be like) an older brother as I did with Sheva, who I could not say no to when the offer came to go to Chelsea."
Milan finished fifth in Serie A last season meaning Kaka, signed from Sao Paulo in 2003, is not playing in the Champions League this term having inspired the Rossoneri to the trophy in 2007.
On Wednesday the 26-year-old said he was happy at the San Siro.
