Italy’s newly-announced plan to tackle debt through pension cuts and tax increases has been welcomed by OECD secretary general Angel Gurría.

Details of the plan were announced yesterday, as heavily-indebted Italy attempts to eliminate its budget deficit by 2013.

To do this, Prime Minister Mario Monti has introduced a package of measures aimed at achieving some €30bn in spending cuts and tax hikes and €10bn at boosting growth through measures such as providing incentives for companies to hire young workers and women.

Under the plan, pension ages will be increased to 66 for men and 62 for women. The women’s age will rise further to 66 from 2018. Most payments will be decoupled from inflation.

The plan will also see re-introduction of a property tax scrapped in 2008, an increase in VAT, a range of measures aimed at reducing tax evasion, and higher taxes placed on luxury goods.

In a statement, Gurría said the proposed pension reforms “go in the right direction” by raising the retirement age whilst introducing flexibility at the end of an individual’s career.

“The revenue measures address the need for fiscal consolidation, while lowering the tax burden on business and on hiring women and young people, so contributing to growth and employment. The composition of measures also aims at addressing inequality with an emphasis on taxing wealth and luxury goods, and combating tax evasion,” Gurría said.

The OECD will continue to support the Italian government, building on best practices in dealing with growth, equity, job creation and fiscal consolidation, Gurría added.

Share Story: