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Published: Wednesday February 26, 2014 MYT 7:30:20 AM
Updated: Wednesday February 26, 2014 MYT 7:30:20 AM

Italy's Renzi wins final confidence vote, pledging reform

Italy's Prime Minister Matteo Renzi speaks during a confidence vote at the lower house of the parliament in Rome February 25, 2014. REUTERS/Giampiero Sposito

Italy's Prime Minister Matteo Renzi speaks during a confidence vote at the lower house of the parliament in Rome February 25, 2014. REUTERS/Giampiero Sposito

ROME (Reuters) - Italian Prime Minister Matteo Renzi won a final parliamentary vote of confidence on Tuesday after pledging to slash red tape and "revolutionise" the economy.

The Chamber of Deputies approved the confidence motion by the comfortable margin of 378 in favour to 220 against, fully empowering the coalition consisting of Renzi's Democratic Party (PD), the New Centre Right party, centrists and other small groups.

Renzi had been expected to win the vote easily due to the PD's lower house majority.

The 39-year-old Renzi, Italy's youngest prime minister, said radical steps were needed to revive an economy that has barely grown for the past 15 years and restore citizens' confidence in politics.

In his first address to the lower house ahead of the vote, Renzi said "Italy's finest page has yet to be written", in a speech that produced many of his trademark rhetorical flourishes but few specific policy commitments.

However in a later television interview he added some details, saying that his government would present amendments within 15 days to unblock 60 billion euros (49.3 billion pounds) to pay off public administration arrears.

He suggested that a promised 10-billion-euro cut in the "tax wedge", the difference between what an employer pays and a worker takes home, could come from reducing required social contributions.

But he backed away from a previous indication by his chief of staff that Italy could increase taxes on Italian debt coupons.

"I think there is space to increase tax on financial investments earnings, I wouldn't say from treasury bills but on pure financial investments, to reduce the costs of labour," Renzi told the interview with television show Ballaro.

DEFICIT

Renzi, the outgoing mayor of Florence and leader of the centre-left Democratic Party (PD), ousted his predecessor, Enrico Letta, as prime minister earlier this month by withdrawing the PD's support from his government.

His 50-minute speech to the lower house was delivered in his usual colloquial style which differs sharply from that of his predecessors. There was little applause even from his parliamentary majority.

He promised to overhaul the tax system by "a gigantic operation of simplification", and to cut unemployment from well above 12 percent with "the courage to revolutionise the economic and legal system of our country".

Renzi spoke of the importance of the European Union, saying Italy's six-month presidency of the region from July was "a gigantic opportunity" to establish a greater role for the country in shaping EU policy.

However, he shed no light on whether he would push for Italy to be given leeway to allow its budget deficit to exceed the EU's ceiling of 3.0 percent of output, as he had suggested on several occasions prior to becoming prime minister.

"Europe today doesn't give us hope because we have allowed the debate to be dominated by decimal points and percentages," he said.

"We want a Europe where Italy doesn't just go and receive instructions but gives a fundamental contribution, because there can be no Europe without Italy."

(Editing by Alison Williams and Andrew Roche)

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