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Tax hikes, spend­ing cuts nec­es­sary to save coun­try from cat­a­strophic fis­cal road, says min­is­ter

Kathimerini English - - Business & Finance -

The gov­ern­ment yes­ter­day de­tailed the next round of tax hikes and spend­ing cuts Greeks will be hit with aimed at sup­port­ing its midterm plan and help­ing se­cure fur­ther fund­ing from cred­i­tors to pre­vent the coun­try from de­fault­ing.

Fi­nance Min­is­ter Gior­gos Pa­pa­con­stanti­nou said that a re­duc­tion in pub­lic sec­tor em­ploy­ees and less de­fense spend­ing, along with tax hikes for salary earn­ers and ad- di­tional prop­erty levies, will be used to help meet this year’s bud­getary goals.

“We have the choice of go­ing down the dif­fi­cult road or the road of catas­tro­phe,” the min­is­ter told re­porters. “There is no way of for­get­ting about the debt and deficit and go­ing back to the past.”

Late on Thurs­day, the gov­ern­ment an­nounced a five-year fis­cal plan which aims at sav­ing al­most 30 bil­lion eu­ros and rais­ing an ad- di­tional 50 bil­lion eu­ros via an agres­sive pri­va­ti­za­tion pro­gram.

Ad­di­tional mea­sures worth 6 bil­lion eu­ros will be needed for 2011 alone to get the coun­try’s fis­cal con­sol­i­da­tion pro­gram back on course af­ter a deeper-than-ex­pected re­ces­sion this year cut into state rev­enues.

Pub­lic ser­vants, es­ti­mated to num­ber about 1 mil­lion, will be re­duced by 150,000 peo­ple by 2015, while the De­fense Min­istry’s op- er­at­ing ex­penses will be cut by half a per­cent of GDP, or some 1.1 bil­lion eu­ros, in the next five years. Spend­ing on de­fense equip­ment will also be cut, added the min­is­ter.

As far as rev­enues are con­cerned, tax­pay­ers will be hit with a new tax of be­tween 1 and 4 per­cent over the next five years while pub­lic ser­vants will also be called upon to con­trib­ute to a fund to sup­port the coun­try’s grow­ing army of job­less work­ers.

The re­forms, ap­proved by the Cabi­net on Thurs­day, will head to Par­lia­ment early next week and are ex­pected to be voted in by the end of the month. Pa­pa­con­stanti­nou said the gov­ern­ment will ex­am­ine the pos­si­bil­ity of low­er­ing value-added taxes in Septem­ber and also sim­plify the tax sys­tem af­ter hold­ing talks with other po­lit­i­cal par­ties.


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