ATHENS — Just a few hours after gaining approval for crucial rescue loans to avoid a messy default, Greek authorities late Thursday unveiled a new tax code demanded by the country’s foreign creditors that will increase the burden on middle-income families, self-employed professionals and farmers.
The bill, which has been the subject of vehement media speculation in recent weeks as austerity-weary Greeks are in no mood for more financial pain, was submitted in Greece’s Parliament late Thursday and will be discussed by lawmakers ahead of a vote, most likely after Christmas, a Finance Ministry official said.
The legislation is expected to be approved as objections by junior partners in the fragile coalition of Prime Minister Antonis Samaras have been to details of the plan rather than to its general thrust.
The government hopes to raise €2.5 billion, or $3.25 billion, by raising the tax on those with middle incomes, trimming child benefits and revoking tax breaks for farmers.
The authorities are also taking aim at around a million self-employed professionals ranging from doctors to plumbers — more than a third of the country’s work force — who have been widely accused of shirking their obligations to the state.
The abolition of a tax-free threshold of €5,000 will mean that the self-employed will be taxed from the first euro they earn.
“The proposed legislation is part of wider plans to create a just and effective tax system, reorganize the tax collection mechanism and apply a stricter framework against tax evasion,” the Finance Ministry said in a statement accompanying the 74-page bill, which also raises the tax on corporate profits to 26 percent from 20 percent while lowering the tax on distributed dividends to 10 percent from 25 percent.
The tax bill, dubbed the “mini tax reform” by Finance Minister Yannis Stournaras, is the first of two tax overhauls. The mini bill is part of Greece’s commitments to creditors to save €13.5 billion over the next two years – through austerity measures and tax hikes — to reduce the country’s budget deficit and make debt sustainable.
In return for the promised measures, Greece’s creditors agreed this week to release €50 billion in funds to help Greece avoid default through the winter.
Early next year, the government plans to introduce a more thorough overhaul of the tax system, introducing immediate jail sentences for large-scale tax evaders rather than suspended terms currently given.
In Athens, opposition to the austerity Greek authorities have pledged to creditors is all too evident.
Greek farmers have been the first to actively oppose the tax bill, blocking road junctions in central Greece with tractors earlier this week.
Local public workers are on strike over plans to push thousands of employees into a fast-track redundancy program aimed at streamlining the bloated civil service.
Judges and prosecutors, who started a go-slow action in September to protest new salary cuts, have decided to extend their action through Jan. 19. The action has already led to thousands of cases piling up.
Parliament staff also walked off the job earlier this week, prompting authorities to withdraw, for the second time in a month, a bill aimed at reducing their wages to the level of other civil servants.