Opinions,top Stories

Roll up your sleeves … time to tackle pensions

The current crisis is international and the Italian government’s budget may hurt, yet it is inevitable. But structural, long-term reform is also needed in the social security system. Immediately, for both men and women.

Roll up your sleeves … time to tackle pensions

This is Italy Team

-

By Giampiero Cantoni (who is)

Such a tough, severe budget has been imposed by a global crisis affecting the entire Western world. No government, economist or pundit could have foreseen that such a major crisis would have hit everywhere, from the United States to Europe. For the first time, in the last quarter, Germany has had to come to grips with zero growth in its gross domestic product. Even China has slowed noticeably, where there are worries about rising inflation. Financial markets are atoning for decades of euphoria and the creation of virtual wealth, paper and toxic stocks and bonds have contributed significantly to polluting the entire economy. So, the leitmotiv must become: "sell, sell, sell". If there is a direction in which the August 12th budget must be modified, it should be to include an explicit, clear call for the need to return to privatization and liberalization by drastically cutting public spending and containing the structural costs of the public sector. Pressure must continue to introduce eurobonds.

Let me be clear. Unlike some of my colleagues, I am not scandalized by the "solidarity tax" requested by the government. It is a painful measure and, of course, it would have been better if we had not been in a condition that required it being levied. But it will only last three years and it is tax deductible. It should be re-worked on the basis of family exemptions to take into account those who, on 4 thousand euros per month, have to support a family and not just themselves. Nonetheless, it is a temporary measure that is more honest and less harmful than a wealth tax which would have once again taxed savings that are already subject to tax as wage income, but which, above all, would have changed the rules of the fiscal game. If what is needed is to shift taxation "from people to things" - as Giulio Tremonti has maintained for years - this must be done intelligently and equitably. It can't be done on an emergency basis using temporary and non-structural measures.

The major structural reform we must undertake is the social security system. The retirement age must be raised immediately, decisively, even for women in the private sector. Let's admit it. Retiring at age 65 when average life expectancy (for women) is over 84, is not a scandal. And it's not a question of acquired rights. If rights have been acquired, they have been acquired by other generations with very different types of working and living conditions (including life expectancy). The same can be said of the old age pensions created in 1969 in an Italy totally different from what it is today. We can and must change. It would also mean finally coming to grips with pension reform - something that has remained incomplete on the back burner for years. If we don't pluck up our courage and do it now, it is another millstone (like that of public debt) we risk leaving to future generations. For which a more intelligent welfare system must be designed that, for example, does not silently rake in the contributions of freelancers without giving these workers credit, as is done today, out of desperation.

To build a more sustainable country, we must start by getting rid of what is no longer sustainable. Which means privatizing and selling real estate. Today, this means in essence transferring properties to the government owned bank, the Cassa Depositi e Prestiti, which can put them up for sale when the market is more favorable. It can be done, but it requires the courage to sell what remains of major public assets. The Bruno Leoni Institute maintains - and this is a conservative estimate - that the state owns assets worth 101 billion euros. Selling alone will not get rid of a 1,900 billion debt, but it does send an important message. Just as putting on the market major shares of the companies owned by the state. These would all be important moves. Because it is immoral for government to tell its citizens to "tighten their belts" before putting the state itself on a diet.

© Riproduzione Riservata

Commenti