Tax and spending policy ready

A range of public spending cuts and tax adjustments were presented by the government yesterday as it attempts to back up its promises to rescue public finances with actions. Following an announcement last week by Prime Minister George Papandreou that PASOK would take drastic measures to prevent Greece from defaulting, Finance Minister Giorgos Papaconstantinou unveiled more specific policies. These included plans to cut the supplementary pay of public servants by 10 percent. The salaries of Papandreou and his ministers will also be cut. Papaconstantinou said there would be no more hirings in the public sector this year apart from in the health service. He also announced changes to the tax system, which will now contain more tax brackets and will lead to higher earners paying more. The tax-free threshold will be set at 12,000 euros. People earning 12-16,000 euros will pay 18 percent tax, those on 16-22,000 will be taxed at a rate of 24 percent, those making 22-26,000 will pay 26 percent, for salaries of 26-32,000 the rate will be 32 percent and for 32-40,000 it will rise to 36 percent. Anyone earning 40-60,000 euros will pay 38 percent tax and those who make more than 60,000 will be taxed at a rate of 40 percent. Citizens will need to produce receipts equal to 30 percent of their income in order to ensure that their first 12,000 euros are not taxed. This measure is designed to stamp out tax evasion and the minister said that cash registers would now have to be installed in all businesses, including gas stations and taxis. Papaconstantinou also said that anyone owning property worth 400,000 to 500,000 euros would pay an extra tax of 0.1 percent and that the rate would rise so that those owning homes valued at more than 800,000 would pay 1 percent of their value in tax annually.

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