Greek Lawmakers Vote Yes To 2012 Budget

by Ulrika Lomas, Tax-News.com, Brussels

08 December 2011

Amid renewed protests and clashes with police, the Greek parliament approved by a large majority the controversial budget for 2012, providing for further tax rises and drastic cuts in spending.

Needed to avert bankruptcy and to secure further international aid, to boost market confidence and to restore international credibility, the budget was adopted by 258 votes to 41, backed by Greek opposition party New Democracy.

Put forward by Greek Prime Minister Lucas Papademos, spearheading the country’s interim coalition government, the 2012 budget aims to reduce the country’s deficit to 5.4% of gross domestic product (GDP) next year from an expected 9% this year, and forecasts a fifth year of economic contraction.

Commenting on the budget in parliament, Papademos underscored that successful implementation of the austerity measures would serve to regain international credibility and create conditions necessary to save the Greek economy. While conceding that the fiscal targets are indeed ambitious, Papademos nevertheless stressed that they are achievable.

Having secured release from international moneylenders of the final EUR8bn (USD10.7bn) loan instalment, Prime Minister Papademos now aims to secure the second EUR130bn international rescue package and debt writedown agreed at a summit in October.

In return for financial aid, Greece has already implemented a catalogue of unpopular and painful increases in taxation over the past year, and agreed plans to accelerate reforms and privatisations, as well as to introduce further cuts in public sector pensions and jobs.

The government also plans to clamp down on rampant tax evasion.

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