In­comes hit again in midterm plan

Tax-free ceil­ing to drop to 8,000 eu­ros from 12,000 now; firms to be bur­dened with an­nual levy

Kathimerini English - - Business & Finance -

Last-minute changes to the gov­ern­ment’s midterm plan aimed at help­ing Greece se­cure the next aid pay­ment to help pre­vent bank­ruptcy held a nasty sur­prise for tax­pay­ers and busi­nesses who saw the tax-free thresh­old drop and an ad­di­tional an­nual levy im­posed on en­ter­prises al­ready strug­gling in the down­turn.

In his first press con­fer­ence as fi­nance min­is­ter yes­ter­day, Evan­ge­los Venize­los said the tax-free thresh­old will drop to 8,000 eu­ros, from 12,000 eu­ros cur­rently. In- come be­tween 8,000 to 12,000 eu­ros will be taxed at a rate of 10 per­cent, with the ex­cep­tion of pen­sion­ers above the age of 65 and young work­ers aged be­low 30. Ad­di­tion­ally, busi­nesses will be called on to pay “an av­er­age small tax of 300 eu­ros per year,” Venize­los told re­porters.

The tax hikes come af­ter the min­is­ter met with rep­re­sen­ta­tives from the Euro­pean Cen­tral Bank, In­ter­na­tional Mon­e­tary Fund and Euro­pean Union over the aus­ter­ity mea­sures needed for Greece to re­ceive the next 12-bil­lion-euro tranche in aid fund­ing and re­ceive a sec­ond bailout pack­age from its cred­i­tors.

The aus­ter­ity mea­sures, which will be in­cluded in the 2011-15 midterm plan, are ex­pected to be voted in by Par­lia­ment next week.

The fi­nance min­is­ter also said that the gov­ern­ment has been en­cour­ag­ing Greek banks to par­tic­i­pate in a so­lu­tion to the coun­try’s crip­pling debt cri­sis.

He said the gov­ern­ment was en­cour­ag­ing a so­lu­tion along the lines of the so-called Vi­enna ini­tia­tive, ac­cord­ing to which in­vestors are asked to vol­un­tar­ily re­new their debt hold­ings as they ex­pire.

“The Vi­enna process is to­tally vol­un­tary,” Venize­los said. “Are we en­cour­ag­ing the Greek banks to par­tic­i­pate? The an­swer is yes,” he said.

A Vi­enna ini­tia­tive ap­proach was used suc­cess­fully in 2009 to help East Euro­pean coun­tries dur­ing the global fi­nan­cial cri­sis. The worry over such a rollover of debt is that it may be con­sid­ered a de- fault by rat­ings agen­cies.

Bel­gium banks yes­ter­day joined Ger­man, French and Dutch peers be­ing called on by lo­cal na­tional gov­ern­ments to dis­cuss whether they are in­ter­ested in dis­cussing pos­si­ble so­lu­tions for the Greek debt they hold.

A Greek de­fault could drag down Greek and Euro­pean banks, en­dan­ger the fi­nances of other weak eu­ro­zone coun­tries such as Por­tu­gal, Ire­land and Spain, and po­ten­tially spark tur­moil in global mar­kets.

Newspapers in English

Newspapers from Greece

© PressReader. All rights reserved.