Italy Approves 'Very Heavy' Austerity Measures

Associated Press + More

The measures raise the pension age to 66 years for men in 2012 and for women by 2018, and also increases to 42 years and one month the years of service for a man to retire with full benefits, 41 years and one month for a woman. Labor Minister Elsa Fornero said it would be possible to retire earlier, "with a small penalty."

Fornero wiped away a tear when she said that the pension reform would require sacrifices, including a hold on inflation adjustments for larger pensions.

[Debate Club: Does the United States Need a Balanced Budget Amendment?]

On the fight against tax evasion, Monti said there would be no more tax amnesties, a mechanism used frequently in the past to recover lost revenues. In addition, the measures imposed a 1.5 percent penalty on money that was repatriated in a recent scheme that allowed Italians who had concealed money abroad to repatriate it for a negligible 5 percent penalty.

The measures also limit cash transactions to payments under €1,000 — down from €2,500. In Italy, paying in cash is common as a way to conceal transactions from the government and avoid paying the value-added tax.

After meeting with Monti earlier Sunday, the head of Italy's industrial lobby said that the survival of the common euro currency depends on Italy's coming up with very strong austerity and growth measures — followed by a concerted effort at the European level so that Italian sacrifices are not in vain.

Confindustria President Emma Marcegaglia described the measures as "very heavy."

The coming days "will decided if the euro will survive or not. The first move to save the euro is in Italian hands, with a very strong measures," Marcegaglia said. The measures will be "fundamental to saving Italy and to saving the euro."

  • See photos of the EU in crisis.
  • See a collection of political cartoons on the Euro Crisis.
  • Obama Directs EU to Act on Debt.