Greece approves key tax commitment
Greece’s parliament has approved new tax legislation aimed at boosting state revenues by 2.3 billion euros ($A2.9 billion) this year.
The law was approved this morning with the support of all partners in the country’s three-party ruling coalition shuffles and simplifies tax scales, reforms family benefits, increases taxation of deposit interest and expands the tax base to include groups such as low-earning farmers.
It brings in a new top tax rate of 42 per cent for Greeks earning more than 42,000 euros ($A53,000) a year. The previous top rate was 45 per cent for incomes above 100,000 euros.
The conservative-led Government argues that the new law will reduce the burden on salary-earners and pensioners making less than 25,000 euros.
"In the current situation we must lead the country out of its impasse. Once we achieve stability we will proceed to cut taxes and simplify the system."
Greece has been kept solvent by huge rescue loans from its European Union partners and the International Monetary Fund.
In exchange for the two successive bailouts, Athens implemented harsh austerity measures aimed to reduce runaway budget deficits while bringing its debt mountain to manageable levels.
Following months of negotiations with the EU and IMF on new spending cuts and reforms, last month Greece received 34.3 billion euros in frozen loans, and is set to get another 15 billion euros in coming months.
The tax law was one of the country’s key commitments to secure the money, without which it would have been unable to pay its bills.
Finance Minister Yannis Stournaras told MPs just ahead of the ballot that they had no option but to pass the law.
"Otherwise, we would have had to have saved that 2.3 billion euros through salary and pension cuts,” he said. “But we are making the savings in a socially just fashion."
