Next batch of austerity measures served

The government detailed on Friday the next round of tax hikes and spending cuts Greeks will be hit with aimed at supporting its mid term plan and helping secure further funding from creditors to prevent the country from defaulting.

Finance Minister Giorgos Papaconstantinou said that a reduction in public sector employees and less defence spending along with tax hikes on salary earners and additional property levies will be used to help meet this year?s budgetary goals.

?We have the choice of going down the difficult road or the road of catastrophe,? the minister told reporters. ?There is now way to forgetting the debt and deficit and going back the the past.?

Late on Thursday, the government announced a five year fiscal plan which aims at saving almost 30 billion euros and raising additional 50 billion euros via an agressive privatisation program.

Additional measures worth six billion euros will be needed for 2011 alone to get the country?s fiscal consolidation program back on course after a deeper than expected recession this year cut into state revenues.

Public servants, estimated to number about one million, will be reduced by 150,000 people by 2015 while the Defence Ministry?s operating expenses will be cut by half a percent of GDP, or some 1.1 billion euros, in the next five years. Spending on defence equipment will also be cut, added the minister.

On the revenue, taxpayers will be hit with a new tax of between one to four percent over the next five years while public servants will be also called upon to contribute to a fund to support the country?s growing army of jobless workers.

The reforms, approved by cabinet on Thursday, will head to Parliament early next week and are expected to be voted in by the end of the month. Papaconstantinou said the government will examine the possibility of lowering Value Added Taxes in September and also simplify the tax system after holding talks with other political parties.

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