Italian Prime Minister Matteo Renzi on Wednesday announced a headline-grabbing package of economic reforms, including a 10—billion—euro cut on labour taxes, but failed to write the measures into law.

Some 10 million workers — those earning up to around 1,500 euros net a month — will benefit from the tax break, effective from May, Mr. Renzi said. It would boost pay packets by about 1,000 euros per year, he added.

“I have no qualms in calling this an operation of historic significance,” Mr. Renzi said.

He told reporters he was “defeated” in attempts to introduce the tax cut from April, because of technical difficulties. He admitted the urgency was linked to campaigning for European Parliament elections, due on May 25.

Facing questions about the lack of implementing legislation — due to be formalized in the coming weeks — and details on funding, the premier said “changing everything” overnight with a government decree was “unfortunately impossible.” He insisted that 7 billion euros could be shaved from public spending this year, even if a top government advisor mentioned a more prudent 3—billion—euro figure to parliament earlier in the day.

Mr. Renzi also calculated that there was more to spend from the state budget because of lower—than—expected debt servicing costs, and said the deficit could be increased by up to 6.4 billion euros without breaking the EU limit of 3 per cent of gross domestic product.

Business associations had also asked for tax breaks. Mr. Renzi responded by announcing a 10—per cent cut in corporate taxation — funded by a hike in financial taxes — and a 10 per cent reduction in energy bills. Both would also be effective from May.

Italy badly needs to boost growth and jobs, as it is emerging from the worst recession since World War II. Mr. Renzi was sworn-in during late February, promising a quick—fire succession of measures to revive the economy and make the country more governable.

Economists have long argued that high taxes on labour and high energy costs are a major drawback for the country. On Tuesday, national statistics office Istat told parliament that payroll taxes represented 49.1 per cent of gross salaries paid in 2012.

Mr. Renzi also said 68 billion euros of debts the state owes to private firms would be settled by July — but again, he failed to provide funding details.

The cabinet approved other reforms, including a 3.5—billion—euro plan to renovate school buildings, and decided to ask parliament to give it a mandate to overhaul unemployment benefits — starting a process that could last months, if not years.

In a crowd—pleasing move, Mr. Renzi also said 100 ministerial cars — a symbol of the privileges enjoyed by Italy’s political elites — would be sold in online auctions from March 26 to April 16.

Upon taking office, the 39—year—old premier — the youngest head of government Italy has ever had — said his credibility was at stake over pledges to deliver quickly on reforms.

He scored a major political victory on Wednesday morning, as the lower house of parliament approved electoral reforms that he agreed in January with conservative opposition leader Silvio Berlusconi.

The new voting rules aim to avoid the possibility of a hung parliament, which last year forced the creation of an unstable left—right coalition. They have yet to be approved by the upper house of parliament, the Senate.

Mr Renzi said a bill to trim Senate powers by turning it into a non—elected chamber made up of regional politicians was ready, but would be opened to consultations for 15 days before being presented to parliament.

The change would speed up the legislative process, as laws would no longer have to be approved by both chambers.

“I am not afraid to risk all of myself on a path of reforms,” the prime minister said, stating that he will consider his political career to be “over” if he failed on overhauling parliamentary procedures.

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