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Updated Friday, December 14, 2012 at 06:07 AM

Greeks earning $55,000 to be taxed at top rate

By DEREK GATOPOULOS
Associated Press

Greeks earning more than (EURO)42,000 ($55,000) per year will now be taxed at a new top rate of 42 percent, under a major new tax reform bill submitted to the country's parliament late Thursday.

Under the new guidelines, the 42 percent top tax rate and earnings threshold replaces the previous level of 45 percent for incomes above (EURO)100,000 ($130,770). The new rate is part of a simplification of the country's tax rules. There are currently eight tax bands ranging from 18 percent to 45 percent. These will be replaced by three tax rates: 22 percent, 32 percent and 42 percent.

Greeks earning less than (EURO)25,000 ($32,700) a year are set to benefit from the new system in spite of the raise in the basic tax band as the government is proposing to raise the threshold on which income is taxed.

The new tax rates, part of the austerity measures demanded by the country's international rescue lenders, were submitted to parliament hours after the finance ministers from the 17 European Union countries that use the euro agreed in Brussels to restart rescue loan payments. Greece is in line to get (EURO)49.1 billion ($64 billion) between now and March, with (EURO)34.3 billion of that amount due in the coming days.

Greek finance minister, Yannis Stournaras, presented his colleagues form the other 16 European Union details of his country's long-awaited tax overhaul before the bill was submitted.

In return for the rescue loans, Greece's international lenders have insisted on a series of reforms, tax raises and spending cuts.

But the successive hikes in taxes, required to meet deficit-cutting targets, have hammered the economy, pushing unemployment up to 26 percent, and with more than 20 percent of the population now officially living in poverty - earning less than (EURO)7,200 ($9,420) per year.

Conservative Prime Minister Antonis Samaras promised the speedy settlement of state debts and the recapitalization of the country's troubled banks with the money from the new loan installments, while spending (EURO)11.3 billion ($14.78 billion) on a debt buyback scheme.

"Today ends a long and difficult period of anxiety for Greece," Samaras told Greek reporters in Brussels.

"It ends the rumors, blackmail and pressures on our country to exit the euro.  Today, Greece gained a great opportunity to stand on its feet and get out of the crisis - standing, not kneeling."

Samaras' center-right New Democracy party lost ground to its main rival, the left-wing Syriza Party, according to an opinion poll released late Thursday.

The Public Issue survey for private Skai television gave Syriza a 4.5-point lead, on 30.5 percent, while the extreme right Golden Dawn was in third place with a projected support of 10.5 percent.

It found that more Greeks now have a negative view of the European Union: 50 percent compared to 46 percent with a positive view - a major shift from the respective positions of 37 and 61 percent six months ago.

The survey conducted Dec. 6-10 had a 3.2 percent margin of error. Several other recent polls had given Syriza a 2-point advantage.


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