ATHENS, Greece – Greece’s left-led government submitted to Parliament late Wednesday a new package of creditor-demanded tax hikes and reforms worth 1.8 billion euros ($2 billion), which it hopes to have approved by lawmakers in time for a meeting of European officials next week.
The country’s reform program is under close scrutiny by its creditors — other European countries and the International Monetary Fund — and approval of the draft law could ease the release of a substantial slice of rescue loans, allowing Greece to pay off bonds due in July.
The proposed measures include raising the main rate of consumer tax by one percentage point to 24 per cent and increasing taxes on fuel, coffee, alcohol, tobacco, hotel stays, luxury goods, fixed-line phone services, gambling and pay TV.
The draft bill also foresees energy market reforms and the creation of a new state asset management firm as part of the country’s massive privatization program.
However, the government didn’t initially include a creditor-demanded contingency plan that would automatically trigger extra budget cuts if Greece misses savings targets in coming years.
Officials say that will be submitted as an amendment later “for technical processing reasons,” but insist that they don’t expect the contingency measures will have to be implemented.
The draft legislation is the latest in a series of income cuts, tax hikes and reforms imposed on austerity-weary Greeks since 2010, when the debt crisis exploded that brought Greece to the brink of bankruptcy and expulsion from the eurozone — the club of 19 European Union countries that use the euro currency.
The country has been keeping afloat with the help of multi-billion euro rescue loans from its European partners and the IMF, released on condition of tough spending cuts and deep structural reforms.
But the cost to the economy and society has been severe. Since the crisis started, economic output has fallen by a quarter, the average income has been cut by at least a third and unemployment is above 24 per cent. Meanwhile, Greece’s debt is expected to peak this year at above 180 per cent of annual economic output.
The 16-month-old coalition government had initially opposed any bailout measures but Prime Minister Alexis Tsipras reneged on election promises and signed up to a third round of rescue loans last year.
Growing public discontent has cost Tsipras his lead to the opposition conservatives in opinion polls. Still, his government passed a painful package of pension reforms earlier this month in parliament with no dissenting votes from the ruling party and its coalition partners.
Parliament officials said the new draft legislation is expected to be debated at a Parliamentary committee Thursday, with a view to it being voted on in the plenary session on Sunday. Controlling 153 of Parliament’s 300 seats, the coalition has a narrow majority to pass necessary legislation without opposition support.
Eurozone finance ministers will meet to discuss the new measures on Tuesday.