NEWS

Further cuts and tax hikes announced

Prime Minister George Papandreou yesterday called on officials in Brussels to hold up their end of the deal and offer «EU solidarity» after his government announced a new raft of austerity measures, including additional tax hikes and a 30 percent reduction in holiday salaries for civil servants. «We are now justifiably expecting EU solidarity, which is the other side of this agreement,» Papandreou told President Karolos Papoulias during a televised address after the Cabinet meeting where the new measures were approved. The new measures, expected to generate 4.8 billion euros in state revenue and savings this year, include an increase by two percentage points in value-added tax, now at 19 percent, a further increase in fuel tax, a 20 percent tax on alcohol and cigarettes and a 12 percent cut in supplementary income payments to civil servants. The measures also include a 30 percent reduction in the so-called 13th and 14th salaries - two additional wages given to civil servants as holiday pay and which unionists have described as a historically established right that they will fight to protect. Announcing the measures yesterday, government spokesman Giorgos Petalotis said they were unprecedented. «A massive effort is being made to get our country back on its feet and stop our economy from collapsing,» Petalotis said, noting that the new measures gave out a strong message of the government's determination to revive the reeling economy. Petalotis said the new measures would generate some 4.8 billion euros in revenue and savings, in addition to the package of cuts worth 5 billion euros heralded by the government at the end of January. Last week visiting European Commission inspectors said that Greece would need to introduce at least 3.5 billion euros' worth of cuts in order to reduce its budget deficit by 4 points to 8.7 percent of gross domestic product this year in line with EU targets. The new measures, and in particular the reduction in income payments for civil servants, provoked strong reactions yesterday. The civil servants' union ADEDY described the measures as unfairly targeting its members and warned that the changes «would threaten social cohesion.» Social opposition to the measures was evident from early in the day. Dozens of pensioners protested outside the prime minister's residence against a freeze on pension payments announced this week by the Labor Ministry. Teachers at state secondary schools held another rally outside the Education Ministry over cuts to their supplementary income. Meanwhile taxi drivers kept their cabs off the roads for a second day in a row, protesting tax reforms that would oblige them to issue receipts and pay tax according to the income they generate. Left-wing opposition condemns measures, demands action Left-wing opposition parties yesterday lambasted the government over its new austerity measures, saying they had unfairly targeted citizens with low and medium incomes. The Communist Party (KKE) accused the socialist PASOK government of «waging a war against the people... for the benefit of the Greek and European plutocracy.» It accused the main conservative opposition New Democracy and the far-right Popular Orthodox Rally (LAOS) of backing this «wild storm» of measures which, it said, would strike «all workers.» The KKE-affiliated workers' union PAME went further, accusing the government of «plundering our lives, destroying our dreams and the future of our children.» The union called a general strike for tomorrow, though it was unclear what the impact of the strike would be. The Coalition of the Radical Left (SYRIZA) used equally strong language, describing the government's announcement of a new round of tax hikes and reductions to income as «particularly brutal and cynical.» A statement issued by SYRIZA described the new measures as «the biggest attack on salaried labor since the restoration of democracy,» referring to the fall of the military dictatorship in 1974. SYRIZA leader Alexis Tsipras accused the government of «shaking Greek society and its conquests to its foundations.» «No one can jeopardize something that does not belong to him, particularly when one has not sought the approval of the owner, and in this case the owner is the Greek people,» Tsipras said. LAOS leader Giorgos Karatzaferis, for his part, defended his support of the new austerity measures. «We'll sweat, we'll cry, we'll bleed but Greece will be saved,» he said.

Online