Italy PM Monti unveils sweeping austerity package

Mon Dec 5, 2011 4:56am EST
 
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By James Mackenzie

ROME (Reuters) - Prime Minister Mario Monti, boosted by positive market reaction, takes a 30 billion euro austerity package to Italy's parliament on Monday to help stem a debt crisis threatening to overwhelm the euro zone.

The cabinet approved the mix of tax rises, pension reforms and incentives to boost growth in a three-hour meeting on Sunday, opening one of the most crucial weeks since the launch of the euro more than a decade ago.

The package, dubbed a "Save Italy" decree by Monti, aims to raise more than 10 billion euros ($13.4 billion) from a new property tax, impose a new tax on luxury items like yachts, raise value added tax, crack down on tax evasion and bring forward measures to increase the pension age.

The spread between German and Italian 10-year bonds fell by 30 basis points and Milan's blue chip index was up by about 2.3 percent.

The first comment from comment from a European leader was also positive. Dutch Prime Minister Mark Rutte, who met Monti in Rome on Monday morning, said he was "very impressed" by the package.

Most editorials on Monday praised Monti for biting the bullet in a difficult moment and for distributing the pain.

"There are times when you have to displease everyone and certainly, this, for Italy is one of those moments," La Stampa said.

Corriere della Sera praised Monti for "participating in the sacrifices" of Italians by renouncing his salary as prime minister.   Continued...