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Posted on: September 28th, 2012 by AlYunaniya Staff No Comments

Greek coalition agrees on main points of austerity package

stournaras

photo: ND flickr

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Upon exiting Maximos Mansion yesterday, after the completion of the 2.5-hour meeting of the political leaders, Fotis Kouvelis and Yiannis Stournaras said that there was agreement on the main points of the austerity package.

Kouvelis stressed that the only thing left now are the details of the final package. “What we ask is a replacement and extension clause in a 4-year phase.” He added that the debate in parliament will include the whole framework, that is the measures, growth, taxation and tax evasion.

FinMin Yannis Stournaras confirmed that there is agreement and therefore there will be no more meetings of the leaders regarding the measures. He added that there is an intention to include clauses for meeting the objectives, that the measures will be voted as soon as possible and that “I have a basis upon which I can negotiate with troika.”

Government decreased by EUR 1 billion to 10.5 the savings that will come from reductions in public expenditure, while raising from EUR 2 to 3 billion the revenues that will be derived from tax increases over the next two years or four if Greece’s lenders agree to an extension to the adjustment period.

According to Kathimerini, of the EUR 10.5 billion in spending cuts, EUR 6.5 billion is coming from cuts to wages, pensions and benefits. The rest is due from savings produced by structural reforms. Up to EUR 8 billion of measures are due to be implemented next year.

As a result of the cuts to pensions, retirees will lose roughly a month’s worth of payments. Any pensions between EUR 1,000 and 1,500 will be cut by 2%. Those between EUR 1,500 and 2,000 will be reduced by 5% and any above EUR 2,000 are to be slashed by 10%. Beyond that, pensioners will have all their extra holiday payments abolished. These had already been reduced to a total of EUR 800 per year. Retirees with supplementary pensions will be even worse off as two monthly payments are to be cut.The increase in the retirement age from 65 to 67 is due to be implemented from next year. Civil servants face cuts of up to 10% to their salaries, while those working at public enterprises will see reductions of between 20 and 30%. Policemen and soldiers will also have their wages reduced. The cuts will be from 6% to 23%. Holiday payments for civil servants, which add up to EUR 1,000 gross, will be abolished.

In terms of tax revenues, the government is aiming to raise about EUR 1.5 billion from tougher measures for the self-employed. They will lose their tax-free threshold of EUR 5,000, although it will remain in place for salaried professionals. Self-employed professionals will be taxed on the whole of their income at a rate of 30 or 35%. Some 300,000 farmers who are currently not obliged to keep records of what they sell will have to do so and will be taxed at a similar rate to other self-employed Greeks.

Meanwhile, Prime Minister Antonis Samaras hopes there is still room for the decision to release the EUR 31.5 billion tranche to be taken at the summit of 18 October -where officials will discuss the request for extension as well- and then convene an emergency eurogroup that will specify decisions. The package of measures will be presented to a Eurogroup working group meeting, finance ministry sources told ANA.

 

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