Greece will not cut wages and pensions yet but will reduce taxes

Greece will not cut wages and pensions any more and will reduce taxes instead, world agencies reported. These are the main pillars of the Government’s programme, agreed by the ruling coalition between the right-wing New Democracy, the Socialists (PASOK ) and the moderate Democratic Left in our southern neighbour.

VAT on basic commodities, restaurants and farmers will be cut down from the current 23% to 13%. There will be no more lay-offs in the budget sector, for which international creditors have demanded a reduction in the administration by a total of 150,000 people until 2015. The additional property tax, which used to be calculated on the electricity bills, will also be eliminated. This tax will be replaced by a single property tax, which will simplify the convoluted system of real estate taxation and will combine all the formerly paid taxes, specified GRReporter.

As of next year, the tax-exempt minimum will be restored to €8,000, up from the current €5,000. The tripartite coalition also projects an extension of the period for payment of unemployment benefits from one to two years.

Political leaders have agreed to postpone the severe austerity measures, worth €11.5 bn, for September. Officially, the country plans to request an extension of the memorandum with international creditors until 2016. The aim is to save money by restricting the lavish spending in the public administration, combating tax evasion and corruption. Athens will also insist on extending the term for achieving a budget deficit below 3% of GDP.

For this purpose, however, the three lenders - the European Union, the European Central Bank and the International Monetary Fund - will have to extend additional funds in order to support the debt-ridden Greek economy and the amount is estimated at around €16-20 bn.

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