Italian PM announces $17.6b in tax cuts

ROME (AFP) - New Italian Prime Minister Matteo Renzi on Wednesday announced ten billion euros (S$17.6 billion) worth of tax cuts in the first major economic announcement since he came to power last month.

Renzi said ten million people earning less than 25,000 euros a year would benefit from a move that is part of a package of measures aimed at reviving the country's flagging economy.

"For us, it is obvious that putting 1,000 extra euros (per year) in the pockets of Italians will help consumption," Mr Renzi told a press conference following a cabinet meeting that approved the broad outlines of his ambitious plan for a rapid shake-up of the way Italy is run.

He said the tax giveaway would be financed by cuts in government spending rather than higher taxes for wealthier citizens.

The leader of the centre-left Democratic Party also announced plans to change the constitution to strip the upper house Senate of its ability to block budgets and unseat governments by passing votes of no confidence.

Earlier on Wednesday, the lower house Chamber of Deputies adopted an electoral reform bill designed to ensure that elections lead to stable governments.

In a largely symbolic move, Renzi revealed plans to auction off 1,500 official cars by the middle of next month.

Other economic measures announced included a 3.5 billion euro programme to invest in school buildings, a cut in payroll taxes for employers and a guarantee scheme designed to give small and medium-sized companies easier access to credit.