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Automatic Tax Increases In Greek Budget Law

By Ulrika Lomas, Tax-News.com, Brussels

23 November 2012


A new law issued by government decree in Greece will monitor public sector budgets on a quarterly basis, with automatic tax increases if budget targets are missed.

The measure was among several announced on November 19 ahead of a meeting of eurozone finance ministers. Departments that miss their budget targets for two consecutive quarters will have an administrator appointed by the Finance Ministry, and the officials in charge of such departments will face salary cuts and potential dismissal. Also, parliamentary employees will see their salaries and pensions reduced to bring them in line with the rest of the public sector.

Meanwhile, money from the sale of state assets, with what seems a wildly improbable target value of EUR50bn, will be placed in a special bank account to be used to pay off Greece’s lenders.

Earlier this month, the Greek parliament narrowly approved additional spending cuts of EUR13.5bn. The measures in the new decrees, however, have become law without being put to parliament.

The Greek government is hoping for the imminent release of EUR31.1bn in new loans, but disbursements have been put on hold as doubts have surfaced, particularly in Germany, over the legality of some aspects of the re-financing package. Desperate talks continue at European level in search of a resolution of the crisis, but the political and economic situation of the Greek government becomes more parlous by the day.

TAGS: tax | pensions | fiscal policy | public sector | law | budget | legislation | Greece

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