ATHENS — Greece provided details Friday of a four-year economic plan designed to extract the country from its deepening debt hole, including new taxes as well as additional cuts to public spending and a winnowing of the civil service.
The plan, submitted in Parliament late Thursday, aims to raise €6.4 billion, or $9.2 billion, this year alone, Finance Minister George Papaconstantinou said at a news conference Friday.
“Efforts will be based chiefly on reducing spending, not on increasing revenue,” he said. He promised a vote on the measures by the end of the month even as protests by opposition parties, unions and the public mount.
“We have to continue this difficult course of fiscal adjustment until we emerge on the other side,” Mr. Papaconstantinou said. Adoption of the new measures is “a prerequisite for further emergency funding,” he added.
Although Greece succeeded in cutting its budget deficit by €12 billion last year, an upward revision of the deficit to 10.5 percent of gross domestic product, from 9.5 percent, and a deeper-than-expected recession has made new measures unavoidable if Athens is to meet its deficit-reduction targets this year.
The European Union and the International Monetary Fund promised Greece €110 billion in loans last year and are now discussing an additional bailout to save Greece from default and avert a financial crisis in the euro zone.
Few details were given about cuts in the public sector, but Mr. Papaconstantinou said that utilities and other state-owned companies, including the state broadcaster ERT, would see their operational costs cut.
Over the next few years, the civil service, which currently employs about 700,000, will be reduced by a quarter, he said. The current ratio of 1 new hire for every 5 departures would be shifted to 1 for 10, he said.
The minister also heralded cuts in Greece’s spending in the defense sector, which accounts for around 4 percent of gross domestic product.
The new taxes outlined by the minister include a graded “solidarity tax,” ranging from 1 percent to 4 percent according to income, with an additional 3 percent tax on the income of civil servants. That money is to go toward an emergency fund for the swelling ranks of the unemployed, currently at 16 percent.
Civil servants already have seen their incomes reduced up to 20 percent over the past year, but the fact that their jobs are permanent puts them in a privileged position, the minister said.
“They don’t face the same risk of unemployment as those in the private sector,” he said.
An emergency tax will also be imposed on the owners of large properties, yachts and swimming pools, the minister added.
In an apparent nod to opposition parties that have vehemently opposed new tax increases, Mr. Papaconstantinou said the government was considering submitting a new tax bill in September that would cut sales and corporate taxes.
“We invite other parties to join a debate on this,” he said.
The value-added sales tax paid by restaurants and cafes is set to go up this autumn to 23 percent from the current 13 percent.
Greece’s governing Socialist Party, known as Pasok, has a six-seat majority in the country’s 300-seat Parliament and should be able to pass the bill despite some objections to certain aspects by Pasok backbenchers.
But the government has come under increasing pressure from its creditors to secure a broader political consensus to ease the implementation of the tough new measures.
Addressing Parliament on Friday, Prime Minister George A. Papandreou suggested that Greeks had little choice and compared the country to a sick patient.
“The medicine we have to take is not pleasant, and the treatment requires devotion and commitment,” he said.
“No prime minister of any country wants to go out with a beggar’s tray and collect money from other countries,” he added. “I certainly don’t, but I do it for Greece.”
At his news conference, Mr. Papaconstantinou said he expected creditors to approve the release of the next scheduled installment of financing to Greece, valued at €12 billion, at some point this month.
The privatization program began this month with the sale of an additional 10 percent of the state telecommunications company OTE to Deutsche Telekom, which is already a major stakeholder. The minister said he believed the government could achieve the target of raising €50 billion by 2015.
Outside the ministry offices, in the city’s central Constitution Square, opposite Parliament, dozens of self-proclaimed “indignant” Greeks have set up tents and are joined by thousands more for nightly protests. Banners strung up between the trees — one reads “We owe nothing, we’ll sell nothing, we’ll pay nothing” — express their opposition to the new austerity measures.
The grass-roots movement, which has been organized without the labor unions that usually lead Greek protests, has grown slowly but surely over the past two weeks.
The two main unions, representing about three million public- and private-sector workers, have called a general strike for June 15.
This article has been revised to reflect the following correction:
Correction: June 10, 2011
An earlier version of this article incorrectly referred to the four-year plan as a three-year plan.
Article source: http://feeds.nytimes.com/click.phdo?i=6e490cb5e94d8b1e5257d4bfbff4f994
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