August 8, 2013 / 7:36 AM / 6 years ago

Italy parliament approves youth jobs measures, sales tax delay

ROME (Reuters) - Italy’s parliament has given final approval to measures to tackle the country’s record-long recession, including tax breaks for firms that hire young people and a delay to a planned sales tax increase.

Italy's Prime Minister Enrico Letta addresses a news conference during a European Union leaders summit in Brussels June 28, 2013. REUTERS/Laurent Dubrule

The Chamber of Deputies approved the measures late on Wednesday night, by 265 votes to 118.

Prime Minister Enrico Letta has repeatedly said getting young people working is the top priority of his right-left coalition. Youth joblessness in Italy has risen to almost 40 percent, more than triple the overall rate of unemployment.

Italy’s economy, the euro zone’s third-biggest, has contracted for eight consecutive quarters, its longest recession since World War Two.

Letta’s fragile coalition has been racked by disagreements over how best to allocate the country’s limited resources to restart growth, and this package was a mediation between the ruling bloc’s two factions.

Silvio Berlusconi’s centre-right People of Freedom (PDL) party had been pushing to cancel the sales tax increase while Letta’s own Democratic Party (PD) had sought tax incentives aimed at creating jobs.

A tax fraud conviction against Berlusconi last week has heightened tensions within the government, with the head of the PD Guglielmo Epifani sparking anger from the PDL on Wednesday by calling for the scandal-plagued media mogul to resign.

The package approved by parliament pushes back a 1 percentage point rise in the main rate of value-added tax, currently 21 percent, to October from July.

The planned VAT increase was put in place by Letta’s predecessor Mario Monti at the end of 2011 as a way to underpin investor confidence in the country’s public accounts during the euro zone debt crisis.

About 800 million euros will be set aside to provide incentives to firms that hire youths who have been unemployed or economically inactive for at least six months.

Reporting by Catherine Hornby; Editing by Catherine Evans

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