European Union and International Montary Fund officials will this week decide if Greece is doing enough to bring its budget deficit under control.
The main opposition party has told Prime Minister George Papandreou there must be tax cuts before they will support the deeply unpopular reforms demanded by the EU and IMF in return for more bailout money.
Conservative leader Antonis Samaras called for a flat 15 percent corporate tax and rejected government plans for increasing taxes.
“You want to raise taxes and reach consensus with us, who have set reducing taxes as a priority? Don’t even think about it,” Samaras said in remarks addressed to the government.
“Lower tax rates are the key to starting the engine of the Greek economy,” he told members of parliament from his New Democracy party. “If you raise taxes, there will be no room for consensus or for renegotiation.”
Papandreou is seeking broad political agreement on measures to tackle Greece’s crisis and prevent Athens from defaulting on its debt, an event the European Central Bank said would create mayhem in the banking system.
Papandreou’s PASOK party holds a comfortable parliamentary majority, but international lenders want all leading parties to support the austerity which they have set as a condition for loans — something which politicians in Portugal have accepted.
Officials from the European Union, ECB and International Monetary Fund — known as “the Troika” — are expected to deliver their verdict soon on Greece’s faltering drive to bring its budget deficit under control.
Their progress report will probably be presented by the end of this week, “possibly a bit later”, according to a spokesman for the German finance ministry in Berlin.
The biggest EU contributor to the bailouts, which Ireland and Portugal have also taken, is Germany, and public opinion there is hostile to extending yet more loans to any country which fails to get a grip on its finances.
Financial markets are anxious for the Troika report which will determine whether Greece receives the next 12 billion euro bailout tranche, key to meeting 13.7 billion of imminent funding needs.
Angry Greeks, blaming their politicians for the mess, demonstrated again at the weekend. Tens of thousands packed Syntagma Square in front of the Greek parliament on Sunday, booing, whistling and chanting “Thieves! Thieves” as they pointed at the assembly building.
Unlike the violent protests last year when radicals clashed with police, the peaceful crowds on Sunday were made up of ordinary Greeks, some of whom brought along their children.
Greeks are angry no politicians have been punished for the corruption they blame for the crisis, as well as the dire state of the economy.