Greeks pass tax bill needed for bailout

Greek lawmakers passed a tax bill seeking to raise state revenue by 2.3 billion euros, part of commitments demanded by international creditors in order to continue to receive further bailout funds.

Greece must meet certain conditions to get further payments early this year. Above, the ancient Greek Parthenon temple. AF

Greek legislators have passed a tax bill seeking to raise state revenue by €2.3 billion (Dh11.27bn), part of commitments demanded by international creditors in order to continue to receive further bailout funds.

"The tax bill is a fiscal necessity, a prerequisite in order for us to get the next loan tranche," the finance minister Yannis Stournaras said before the vote in comments broadcast live on Vouli TV.

Euro-zone finance ministers approved €49.1bn of rescue payments to Greece on December 13 to keep the recession-wracked country solvent, with €34.3bn paid immediately. Greece must meet certain conditions to get further payments early this year, Jean-Claude Juncker, the head of the group of 17 euro-zone finance chiefs, said at the time.

With the tax changes "we're significantly broadening the tax base via the compulsory declaration of all income from all citizens and through the full inclusion in the tax system of those who up until now have been taxed less," said Mr Stournaras.

He said earlier this month that the tax bill was the most decisive prior action required for further bailout funds to be disbursed. The bill comprises 24 changes, including reducing the number of tax brackets to three from eight with a new top rate of 42 per cent for individuals who earn €42,000 or more a year.

Other changes include cutting the corporate tax rate to 32.8 per cent from 40 per cent and imposing a 20 per cent capital gains tax on Greek stocks from July 1. The changes place more of the payment obligation on businesses, especially the self-employed, reducing the burden on employees and pensioners by €100 million compared with last year, Mr Stournaras told parliament.

The bill had to be voted on before a meeting later this month of euro-zone finance ministers who will determine whether to release Greece's next tranche of funds, Mr Stournaras said on January 4.

Another tax bill that will include measures to tackle tax evasion will be submitted to parliament for approval by May.

* Bloomberg News