ECONOMY

Deeper, lengthier cuts coming

The target of the latest set of measures that Finance Minister Evangelos Venizelos presented in his speech at the Institute of International Finance on Monday is between 6.5 and 7 billion euros and is likely to be explained in a press conference in Athens at noon on Tuesday.

The measures include the retrospective slashing of tax exemptions from January 2011, new cuts in pensions by an average of 4 percent and an additional 20 percent reduction in state salaries.

?Three months after the additional measures of June, the government has agreed to further measures that amount to 3 percent of the country?s gross domestic product,? Venizelos stated in Washington.

He added that the measures are being taken in order for Athens to meet the fiscal targets set for this and next year in an environment of ?deep recession, bad liquidity conditions, uncertainty and anxiety.?

The new measures specifically concern: A 20 percent decrease in state sector salaries in addition to the 15 percent already enforced and the 25 percent reduction at companies in the greater state sector (such as utilities etc); a further cut in pensions by 4 percent on average on top of the 10 percent already applied; a labor standby scheme for 30,000 public sector workers up to the end of 2011; and the application of the rule for one hiring for every 10 layoffs for the whole of the duration of the midterm fiscal plan, i.e. until 2015.

Other provisions include cuts in tax exemptions to the amount of 0.6 percent of GDP, to cover the whole of the year. The tax-free ceiling will go down to 5,000 euros (regarding annual income), which will automatically mean a major cut in the discounts and exemptions that taxpayers currently enjoy.

Finally, the new set of measures includes the hugely controversial emergency property tax, which citizens will pay via their electricity bills. Venizelos suggested that it will amount to 1.1 percent of GDP and continue for the whole of the midterm fiscal plan, against an original plan for just 2011 and 2012, as the minister had announced earlier this month in Thessaloniki.