Greece Announces 90% Tax On Bankers' Bonuses

by Ulrika Lomas, Tax-News.com, Brussels

17 December 2009

Greek Prime Minister George Papandreou has announced a series of austerity measures, designed to prevent a collapse of the state, including cuts in social security spending and the introduction of a 90% tax on bankers’ bonuses.

Determined to protect the financial credibility of Greece, Papandreou has urged the nation to close ranks and to take the necessary joint decisions required to safeguard the country's reputation.

Under the proposals, in addition to the spending cuts, state-controlled banks will not be allowed to issue bonuses.

Papandreou has also revealed that a new tax system will be created specifically for offshore businesses. Property and indirect taxes will be increased, he added.

Other emergency measures unveiled recently include plans to intensify the fight against corruption and tax evasion, measures to reform the country’s ailing pension insurance system, and plans to legalize thousands of migrant workers, in order to receive their pension contributions.

Defending the austerity measures, Papandreou emphasized the need to take action to prevent the country sinking into debt. By taking drastic action now, Papandreou assured the country that the budget deficit will be reduced to below the European Union’s limit of 3% of GDP by 2013.

This year, new debt currently stands at over 12.7% of GDP, and overall debt is around EUR300bn.

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