ECONOMY

Incomes hit again in fiscal plan

Last-minute changes to the government?s midterm plan aimed at helping Greece secure the next aid payment to help prevent bankruptcy held a nasty surprise for taxpayers and businesses who saw the tax-free threshold drop and an additional annual levy imposed on enterprises already struggling in the downturn.

In his first press conference as finance minister on Thursday, Evangelos Venizelos said the tax-free threshold will drop to 8,000 euros, from 12,000 euros currently. Income between 8,000 to 12,000 euros will be taxed at a rate of 10 percent, with the exception of pensioners above the age of 65 and young workers aged below 30. Additionally, the self-employed will be called on to pay ?an average small tax of 300 euros per year,? Venizelos told reporters.

The tax hikes come after the minister met with representatives from the European Central Bank, International Monetary Fund and European Union over the austerity measures needed for Greece to receive the next 12-billion-euro tranche in aid funding and receive a second bailout package from its creditors.

The austerity measures, which will be included in the 2011-15 midterm plan, are expected to be voted in by Parliament next week.

The finance minister also said that the government has been encouraging Greek banks to participate in a solution to the country?s crippling debt crisis.

He said the government was encouraging a solution along the lines of the so-called Vienna initiative, according to which investors are asked to voluntarily renew their debt holdings as they expire.

?The Vienna process is totally voluntary,? Venizelos said. ?Are we encouraging the Greek banks to participate? The answer is yes,? he said.

A Vienna initiative approach was used successfully in 2009 to help East European countries during the global financial crisis. The worry over such a rollover of debt is that it may be considered a default by ratings agencies.

Belgium banks on Thursday joined German, French and Dutch peers being called on by local national governments to discuss whether they are interested in discussing possible solutions for the Greek debt they hold.

A Greek default could drag down Greek and European banks, endanger the finances of other weak eurozone countries such as Portugal, Ireland and Spain, and potentially spark turmoil in global markets.