Greek Finance Minister Presents Austerity Plan To Greek Parliament

ATHENS, Greece (AP) -- Greece's finance minister presented details of harsh spending cuts and tax hikes to a parliamentary committee on Friday, after tough negotiations with the country's international creditors.

The measures are to be voted on in parliament next week in two bills -- a euro28 billion ($39.8 billion) midterm austerity plan and an implementation law. They must both pass if Greece is to receive a critical installment of its international bailout loans next month, in time to prevent a potentially disastrous default that could drag down European banks and affect other financially troubled European countries.

The ministry issued the 73-page implementation law Friday evening. It details the creation of a body to handle a euro50 billion ($71.1 billion) privatization drive to 2015 and a raft of tax hikes, including imposing more income tax on those earning small salaries of euro8,000 (around $11,000) a year, a "solidarity tax" on everyone earning above euro12,000 ($17,000) per year.

It also increases taxes on heating fuel for businesses, imposes a limit on civil service hirings to one for every 10 departures, and hikes some consumer taxes and road tax.

"Yesterday was a very unpleasant day for me, because I had to tell bitter truths, and we had to agree on very tough measures, measures which also include the element of injustice and the element of overtaxation," Finance Minister Evangelos Venizelos told the financial affairs committee.

He said he could not rule out having to impose even more measures during his tenure as finance minister, although he and his deputies would try to ensure that would not be necessary.

"We can't keep coming back every so often and ask for corrective measures, but I won't state that I will never introduce more measures while I am finance minister and am handling a crisis," he said. "We ... will make every humanly possible effort to execute the budget and the midterm program without new measures. But the result depends on the state as a whole, the public administration, the whole market, the tax compliance of all citizens."

The austerity bill will be brought to parliament for debate on Monday and Tuesday, with a vote to be held either Tuesday or Wednesday, finance ministry officials said. The implementation law is to be discussed on Wednesday, with a vote expected on Thursday, although the discussion could spill over into Friday, the official said.

Angered by measures that include higher taxes for those earning around the minimum wage, unions have called for a 48-hour general strike next Tuesday and Wednesday, during the parliamentary debate.

Greeks have also faced intermittent power cuts for days as workers at the country's power company continue 48-hour rolling strikes. The company filed a suit in an Athens court Friday asking for the strike to be declared illegal -- a move which, if approved, would force the employees back to work. The court said it would issue a final decision on Monday.

The organization's union objects to the company being privatized as part of an ambitious drive to raise euro50 billion by selling state assets by 2015.

"We are not in a position at the moment to make the choices we would want to make," Venizelos said in his speech in the parliamentary committee.

Despite receiving a euro110 billion package of rescue loans from other European Union countries that use the euro and from the International Monetary Fund last year, Greece has found itself in need of more help as it struggles to meet revenue and cost-cutting targets in the midst of a recession.

The country's international creditors have been discussing a second bailout for the troubled country, and EU leaders meeting in Brussels Thursday night gave their clearest sign yet that Greece will get one.

Venizelos said one of the main issues facing the Greek economy, which is deep in recession, was the lack of growth, and said he would meet with his German counterpart Wolfgang Schaeuble in Berlin to discuss the matter. He did not give a date for his trip.

Derek Gatopoulos in Athens contributed to this report.

Comments

[halfpricefaustian]

04:29 PM on 06/26/2011

Before they raise tax rates they have to collect taxes. Kinda like how we shouldn't cut corporate tax rates from 35 percent while almost no companies pay more than 20 percent taxes.

[democrats for life]

10:41 PM on 06/25/2011

the Greeks have been cheating on their taxes for over 100 years, why would they start paying taxes now?

[fortressfountain]

10:19 PM on 06/25/2011

Humm, this sounds like an agenda for the banks to force everyone into debt. Being in the eurozone may be good for the elite running the country-but how is this benefitting the people who live in the country.
The international banking system has created a nightmare and enslavement of all people unless you are rich or elite.
The banks must be stopped before the ruin the world.
I mean why can't I just hold out my money for money and charge interest, points and fees just for the privilege of loan money at 80% interest rate?
Who was it that made bad loans and speculated because they knew they would be bailed out?
I want someone to pay me more money than I loose at a casino also.

[tcnsrq]

07:04 PM on 06/25/2011

the fallacy of composition = the Tea party

[horseguards]

02:41 PM on 06/25/2011

Beware of bankers bearing gifts.

[Aikaterina]

02:10 PM on 06/25/2011

So-called "austerity" is an invasion by bankers to dictate policies to a nation and force the privatization of national-public assets: islands, monuments, public works, etc., which will leave the country with nothing in the future, for the benefit of foreign banks and countries.

The so-called "bailouts" by the EU and foreign banks was not for Greece's benefit, but to buy time for the Eurozone, avoid another Lehman-type shock when banks were weaker and unable to withstand such loss.

Buying time helped the banks, but included terms whereby Greece must incur much greater debt (France & Germany insisted on future multi-billion military-arms contracts with their firms) and insisting Greece privatize (sell) islands as recent studies have shown immense natural gas reserves in the Aegean, and oil reserves off the island of Crete.

Britain has a far greater (percentage of GDP and per-capita) debt, yet Cameron while insisting the UK not render any aid to Greece, is voting on and having influence on terms and measures with which Greece must comply.

The public does not want more bail-outs, which will add to their debt, benefit banks with higher interest-commissions, and not improve conditions there. Benefits, public services have been cut drastically, and unemployment is above 18%.

[greyhound2]

09:28 AM on 06/25/2011

Greek workers who get to retire at age 53 with 80% of their working salary have a national debt of about $44,000 for every man, woman and child in the country.

American workers who never get to retire, or retire at 66 with 45% of their working salary have a national debt of about $45,000 for every man, woman and child.

What's the difference? America's military-industrial complex. That's what it is costing you to be the policeman of the world. Worth it? Not!

[Aikaterina]

02:41 PM on 06/25/2011

Pensions and public benefits account for less than 10% of the total Greek debt. Profilgate tax evasion (by wealthy) accounts for a far greater portion, as does the borrowing-and-spending of the government itself to finance other operations.

Wage-earners and small business owners can't hide their incomes. It was the wealthy who were falsifying tax returns, whisking their money to off-shore bank accounts (to elude audits), and multi-national corporations who got sweetheart "no-tax" deals to set up shop there, who've drained the revenues for decades.

In fact, Greek civil servants have the option to retire after 17.5 years of service or age 53, but with HALF benefits. Those who retire early often go on to other jobs. To receive full retirement benefits, they must work 25-30 years or 62 years of age.

According to data/statistics, the average retirement age for publicly-privately employed Greeks is 61.7 years (higher than France, Germany, Italy or the EU average).

On average, Greeks work 2120 hours annually: 690 more than Germans, 467 more than Britons, and 356 more than the EU average.

The national debt of Greece pales in comparison to that of the UK, where their debt is far higher (% of GDP and will cost the average Briton over $70,000).

[Christian09]

10:56 PM on 06/25/2011

very interesting....In the US, they never go into the specifics of what's going on in Greece. If your facts are correct, then it looks like Greece is the like the middle class in America.

[greyhound2]

06:22 PM on 06/26/2011

Thanks for the information. Looks like Greece with its wealth class falsifying tax returns, whisking money to off-shore bank accounst and sweetheart "no tax" deals sounds just like the United States! Guess corruption, as a human condition, knows no borders.

[SouthSwell]

08:39 AM on 06/25/2011

Being a slacker nation eventually catches up with you.

[FogBelter]

01:41 AM on 06/25/2011

I think the Greek people should let their representatives in the Parliament know that if they vote for this Austerity measure their political careers are over. Greece is going to default, for it is incapable of paying back its outstanding debt. All that implementation of the Austerity measures and Privatizations would do is allow the international bankers who created this crisis to cherry pick Greek assets before the bottom falls out. Greece should default and preserve its sovereignty and assets. The die is cast in terms of default, anyway.

[Aikaterina]

02:51 PM on 06/25/2011

Exactly!

Greece has already forfeited future airport fees and national lottery proceeds to pay just interest on its debt. There's increasing pressure to sell of some of the islands to private investors (corporations and banks), when coincidentally natural gas reserves have been found in the Aegean, and oil was found off the island of Crete.

The so-called bailouts are to enable bankers to manipulate and dictate terms, conditions on Greece that will be impossible to fulfill, no matter how many budget cuts the country imposes, or assets it sells.

Foreign governments (UK, Germany & France) are attaching high-cost strings to their loans, eg. forcing Greece to spend billions on military hardware-weapons (from their firms), which it doesn't need. Cameron insisted the UK not contribute a dime towards Greece's recovery, yet wants to vote on and dictate terms of EU loans to Greece, even as the UK still refuses to adopt the Euro as its currency.

This is an invasion. The invaders wear designer suits (not military uniforms), and their weapons are laptops or pens (instead of artilery or bombs). Foreign banks and governments are manipulating situations to make it more difficult for Greece (hopeless, actually) to recover, dictating terms-conditions that are untennable and will deprive that country of its sovereignty, growth or assets (worth).

[josephXY]

01:30 AM on 06/25/2011

A side effect of the crisis in Greece is interestingly never reported: that the Greek
media are in a serious financial crisis, some are going bust. They may have been
digging their own grave. http://tinyurl.com/6832zee

[GeorgieMark]

10:57 AM on 06/25/2011

On the flip side, many Greek media outlets belong to mega corporate conglomerates (construction, defence, telecom) who are partners with the Greek state in many ventures (shipping, roads, airports, defence etc) and would give an arm and a leg to see the job market crumble resulting in cheap labour.

http://english.aljazeera.net/programmes/listeningpost/2011/06/20116258446620353.html?utm_content=tweets&utm_campaign=Trial3&utm_source=SocialFlow&utm_term=twitter&utm_medium=ExperimentMasterAccount
Having said that, there is now question that the Greek labour market is skewed due to faulty policies, however the current bout of austerity measures do not set things right, they are creating deep social and economic imbalances.

[irochfpst]

11:43 PM on 06/24/2011

like i said. this is planned larceny. the people should not give in and force the country to default. if not, all the public assets will be sold and the taxpayers will still be stuck with the bill. they will see higher prices for goods and services. if the people of greece really want to to help themselves, they should stop spending and start saving.

[themodernleader]

10:52 PM on 06/24/2011

This betrayer of democratic government should be impeached and replaced by a leader who walks away from repaying an impossible debt. Then the Greek people can again manage their own affairs.

[democrats for life]

08:53 PM on 06/24/2011

this is all just a big front, the banks need a few more months to get their money out of Greece before the big collapse. it would be great to see the banks get stuck with the debt though

[Aikaterina]

02:59 PM on 06/25/2011

The first so-called "bail-out" bought time for the foreign banks to divest themselves of their investments, knowing the severity of the problem, before it caved in on them.

The first bail-out did nothing to help curb the debt (since most was dedicated towards interest-only payments), and came with so many conditions, Greece lost in that deal: future airport fees and national lottery proceeds go towards foreign bankers.

In the meantime, Moody's and other ratings agencies gave Greece high ranks until the foreign banks got most of their investments out of the country, and since have systematically downgraded Greek debt, making it akin to those "toxic assets." Now, Greece pays much higher interest rates, so less of what it does pay reduces principle, and has frightened off any potential private investors, who'd otherwise be willing to start enterprises there or buy bonds, helping the cash-flow and unemployment situation.

[Kelly Nickell]

08:20 PM on 06/24/2011

Ahh, neoliberalism kicks into high gear. I wonder what the Acropolis will go for.

[viking1969]

12:24 AM on 06/25/2011

Utter nonsense. Flippant comments are a poor substitue for a reasoned argument.

[iam99]

04:17 AM on 06/25/2011

Nothing appearing here should have any bearing whatsoever. Boredom and insomnia drives most to these infernal machines and the desire for some information.

[Kelly Nickell]

08:31 AM on 06/25/2011

Thanks vike, I'll keep that in mind next time.

Other than that, your comment has been duly noted and only partially ignored.

[LisaViger]

05:51 PM on 06/24/2011

Like Chris Chistie, and all the others calling for "austerity," this guy doesn't look like he's missed any meals.

[frank day]

06:39 PM on 06/24/2011

I was about to post the same thing.

Why do all of these guys telling us to 'cut back' look like they lack any self-discipline

in their own lives???