Midterm economic program eyes taxes, pensions

The government?s midterm fiscal program, which was discussed on Monday during a tense cabinet meeting and is to be debated further on Tuesday between Prime Minister George Papandreou and his political rivals, aims to raise 6.4 billion euros through the imposition of additional direct and indirect taxes, it emerged yesterday. Of these, 4.8 billion euros? worth have been approved by the Cabinet, while the remainder are still under discussion.

Among the measures to be implemented, assuming they are voted through Parliament later this week, is the transfer of several goods and services from the medium 13 percent value-added tax (VAT) bracket to the higher 23 percent bracket as well as the abolition of tax breaks, the imposition of taxes on natural gas and on soft drinks and an increase in road tax.

Other reforms foresee the introduction of a levy on high pensions exceeding 1,700 euros per month.

Also private firms will also be obliged to pay an additional 1 percent in social security contributions with the aim of boosting unemployment benefits.

Many measures remained subject to approval on Monday at the end of a cabinet meeting in which internal rifts that have been festering within PASOK came to the surface.

According to sources, the most vehement criticism was voiced by Defense Minister Evangelos Venizelos, who reportedly accused Finance Minister Giorgos Papaconstantinou of ?arrogance? in his stance opposite the rest of the Cabinet.

Venizelos allegedly accused Papaconstantinou, who has spearheaded the drafting of the government?s midterm program, of concealing details from the rest of the Cabinet and failing to provide answers on an ambitious privatization drive.

On emerging from the cabinet meeting yesterday, Venizelos sought to play down the reported dispute, telling reporters that he had been referring to ?officials and agencies of the ministry? when he had spoken of arrogant behavior.

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