About €20 billion would come from cuts, including major changes to how Italian workers' pensions are calculated and a one-year increase in retirement ages, effective in January, Prime Minister Mario Monti announced Sunday night.
The rest of the package involves a 1.5% tax on financial transactions, a new tax on high-end boats, cars and planes and efforts to crack down on tax evasion. It would cut provincial government costs while attempting to boost the Italian economy by rebuilding infrastructure.
In announcing the cuts late Sunday, Monti -- who also serves as finance minister -- said he would take no salary for either position.
The country's minimum pension of €500 won't be cut, Welfare Minister Elsa Fornero said. But Italian workers would see their pensions based on their entire salary history, rather than the last three years -- a move that could cut the average retiree's pension by about €100 ($135) per month.
The announcement came after a weekend of difficult talks among political parties and with Italian labor unions, and Fornero began to cry as she announced the cuts. The package needs to be approved by Italy's parliament.
Italy is the third-largest economy in the euro system and the largest bond issuer, with nearly €1.9 trillion in debt. It's the latest European country to face hard questions over its debt load, a crisis that has threatened to unravel the common currency for 17 European states.
Monti took office in November following the resignation of longtime premier Silvio Berlusconi, who was brought down by difficulties in pushing through budget cuts. He was the second European leader forced out by a debt crisis, along with Greece's George Papandreou. Monti, a former European Union commissioner, told his people the measures are necessary to "save Italy." He said Italians should blame him, not European Union leaders, for the cuts.
"I will never ask Italians to take sacrifices because Europe is asking for them," he said. But he added, "I prefer criticism of me rather than Europe. Things can go on without me, not without Europe. For the latest updates on the stock market, visit Stock Market Today
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