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Renzi announces $10bn package to help economy

Staff writer |
Italian prime minister Matteo Renzi announced a $10 billion package of tax cuts and other measures to revive growth in Italy's economy, increase investment in education and create jobs in particular for young people.

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The prime minister also said that €68bn in overdue public procurement bills would be paid by July in a move that would be a boost to the economy. He didn't provide details on how the arrears payments would be financed.

Mr. Renzi said his government's overhaul of the country's tax system, public administration and justice system will be announced before July 1, when Italy takes charge of the rotating European Union presidency in the second half of the year. "The main enemy we are fiercely fighting are those who say, 'We've always done it this way."

In a televised news conference, Mr. Renzi stood beside a photograph of a grocery cart filled with food, and he announced tax cuts targeted at lower-income workers, that would amount to up to €1,000 a year in additional net pay for a worker taking home up to €18,000 a year. The cuts are designed as deductions in an effort to make working in the black economy less attractive.

Business labour tax cuts of €2.4bn were also announced.

Mr. Renzi said the money to fund his plans would come from a fall in Italy's borrowing costs, up to €7bn in cuts in public spending this year and a possible rise in Italy's budget deficit this year while remaining below the EU's ceiling of 3% of output. Italy is currently targeting a deficit of 2.5% of GDP this year after 3.0% in 2013.

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