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Reply #7: Italys Leader Unveils Radical Austerity Measures [View All]

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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-05-11 07:07 AM
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Telling Italians that the fate of their country and the euro was at stake, Prime Minister Mario Monti unveiled a radical and ambitious package of spending cuts and tax increases on Sunday, including deeply unpopular moves like raising the countrys retirement age...Mr. Montis proposals include reintroducing an unpopular property tax that Mr. Berlusconi abolished in 2008 to fulfill a campaign promise. The new measures would also prohibit cash transactions above 1,000 euros ($1,340), in the hope of making tax evasion harder; raise the countrys value-added tax by two points to 23 percent starting in September; and give incentives to businesses to hire new workers.

The countrys new welfare minister, Elsa Fornero, a pension expert, choked with emotion at the news conference as she explained how Italians would be asked to sacrifice today in order to make the pension system less arbitrary and more equitable for future generations.

The standard retirement age, now 60 for many women and 65 for most men, would quickly rise to 62 and 66, with incentives to keep working until age 70; the standard age for women would eventually rise to match that for men. Pensions would be based on the number of years of contributions, not on the workers salary at the time of retirement, as is common now...

The measures are meant to slash the cost of government, combat tax evasion and step up economic growth, so the country can eliminate its budget deficit by 2013. Mr. Monti took the steps in an emergency decree, which means they will take effect before he presents them to Parliament for formal approval...The hope is that they will take some of the market pressure off Italy, whose borrowing costs have been pushed up in recent weeks to levels that have led other European countries to seek bailouts; once Italy has shown it is committed to austerity, the European Union can move ahead with broader plans to shore up the euro.
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