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Greece Unveils Further Austerity Initiatives

by Ulrika Lomas, Tax-News.com, Brussels

23 September 2011


The Greek government has unveiled details of a fresh wave of austerity measures, including key fiscal initiatives, aimed at appeasing international moneylenders as the country battles to secure release of a further tranche of aid to avoid imminent default and to endeavour to secure its future within the eurozone.

Announced recently, the measures include plans to reduce the tax-free allowance on annual income tax from EUR8,000 currently to EUR5,000, applicable to 2011 income, and to extend the government’s proposed new property tax, initially set to expire next year, to 2014.

Together with plans to accelerate reforms and privatizations, the government now also intends to increase the tax levied on domestic fuel and to introduce further cuts in public sector pensions.

Under the proposed plans, pensions in excess of EUR1,200 a month will be reduced by 20%, while pensions for civil servants retiring before 55 will also be cut. As part of a labour reserve programme, up to 30,000 civil servants will also face job losses this year.

According to government spokesman Elias Mossialos, the government’s bill on taxation is due to be voted on in parliament by the end of October. The bill aims to correct existing inequalities and injustices in the current system that has dominated the country for decades, Mossialos added.

Underscoring Greece’s commitment to remaining a member of the eurozone, Mossialos emphasized that the new measures are designed to enable Athens to meet its ambitious deficit reduction targets.

Commenting on the proposed measures, Greek Finance Minister Evangelos Venizelos also underlined the need for further initiatives, stressing that the government would take any action necessary.

TAGS: tax | economics | pensions | property tax | fiscal policy | public sector | budget | tax thresholds | Greece | individual income tax

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