* Approval seen as test case of Renzi reform credentials
* Prime minister set to unveil cuts to income tax, job
* New voting system faces criticism
By Roberto Landucci
ROME, March 12 Italy's lower house of parliament
approved a new electoral law aimed at ensuring more stable
governments on Wednesday, giving a boost to Prime Minister
Matteo Renzi as he prepares to unveil a fresh package of tax
cuts and economic reforms.
The reform, aimed at preventing a repeat of last year's
deadlocked election by favouring bigger parties and stronger
coalitions, must now go to the Senate where it is likely to face
additional amendments from Renzi's own centre-left Democratic
Replacing the widely criticised electoral system, parts of
which have been ruled unconstitutional by Italy's highest court,
has been seen as a test of 39-year-old Renzi's ability to pass
wider reforms to help pull Italy out of its worst economic slump
since World War Two.
Renzi, who reached an accord with centre-right leader Silvio
Berlusconi before the package came to parliament, pressed hard
for the bill to be approved before he presents his first
concrete tax cuts since taking office.
Economic reforms, expected to include 10 billion euros
($13.87 billion) in income tax cuts for low earners and more
flexible employment rules to boost job creation, are intended to
give a lift to a national mood darkened by two years of
recession and record unemployment.
"On April 27, there will be another 100 euros in pay
packets," Renzi was quoted as saying by the La Repubblica daily.
He is due to unveil the measures at a news conference at 5 p.m.
The electoral reform is not directly connected with the
economic measures. But Renzi, who took office last month after
ousting his party colleague Enrico Letta, has promised an
ambitious timetable of reforms and he could ill afford any
significant delay on a measure he has promised for months.
"Thanks to the deputies. They've shown we can really change
Italy. Politics 1-Defeatism 0," he tweeted after the vote.
The bill approved in parliament has faced opposition from
smaller parties and increasing criticism from within the PD,
where party critics say the prime minister made too many
concessions to Berlusconi.
The electoral law sets higher minimum thresholds for entry
to parliament, which will reduce the number of smaller parties,
and provides for a run-off round to decide the winner if no
coalition or party reaches a minimum of 37 percent of the vote.
Whichever side wins will benefit from a so-called "winner's
premium", guaranteeing a clear majority.
However it maintains aspects of the old law that were widely
criticised, including the system of so-called "blocked lists"
chosen by the parties which does not allow voters to vote
directly for individual candidates.
Most critically, it does not apply to the Senate, which has
equal powers with the lower house but which Renzi wants to
reduce to the status of a powerless regional chamber in order to
make a stable parliamentary majority easier to achieve.
That change will require a constitutional amendment which
could require a year or more to pass. Until it is, any new
election would have to be conducted with two separate voting
systems for the two chambers.