Increasing revenue from taxes is the crux of the austerity plan put forward by Greek Prime Minister George Papandreou. The revised plan contains measures aimed at clawing back 14.9 billion euros in taxes over four years – that is 649 million euros more than the initial version, unveiled in mid-June.
There will be a new solidarity tax. Those earning more than 12,000 euros a year will be obliged to hand over one to five percent to the Greek Treasury. This should generate an extra 1.38 billion over the four year term. VAT in cafés and restaurants will leap from 13 to 23 percent.
Luxury items like yachts, swimming pools and high-end cars will also be taxed – and the rate on property will be increased.
The tax free threshold has been lowered from 12000 to 8000 euros.
Paying tax is a touchy subject in Greece. Even the new finance minister acknowledged that the system is fallible, but went on to ask parliament to approve his new plan.
“So our top priority will be to implement a new tax system we hope will be widely accepted which will put an end to the provocative injustice that makes those who do not evade tax pay more than those who do,” said Evangelos Venizelos.
But Venizelos and Papandreou are having difficulty getting the political opposition on board. Calls for unity have gone unheeded by the Left and Right.
And on the streets, there is anger. It is estimated these latest measures will cut average earnings by a further three to four percent. You are taxing the tax payers while ignoring the tax dodgers is the popular refrain.