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Cut to the Bone: The Samaras Measures

Prime Minister Antonis Samaras is betting that more austerity will save Greece and right the faltering economy

Already buried by 2 ½ years of austerity measures imposed by the government on the demand of international lenders putting up $325 billion in bailouts for the country’s faltering economy, Greek workers, pensioners and the poor will face another unprecedented round of pay cuts, tax hikes and slashed pensions put together by the administration of Prime Minister Antonis Samaras.
He had vowed to resist additional austerity before the June 17 campaign – as he had when then PASOK Socialist leader George Papandreou was Prime Minister from 2009-11. Samaras changed his mind and supported austerity when he served in a six-month temporary government with technocrat Lucas Papademos, before reversing himself again while campaigning, only to turn around again when he won.
The $17.45 billion spending cut and tax hike plan for 2013-14 pushed by the New Democracy Conservative party leader, with fragmented opposition from his coalition partners, the PASOK Socialists and tiny Democratic Left, was imperative, he said, or the country would go broke and the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) wouldn’t release a delayed $38.8 billion installment.
There’s much opposition from labor unions and other sectors. The Hellenic Medical Association claimed that health care changes would disrupt medical practice with uncontrolled consequences for the population’s health and were aimed at perpetuating a monopoly of the market by pharmaceutical companies.
The government, however, did not go along with a demand by the Troika for a six-day work week but there was no mention of going after tax evaders who owe the country $70 billion, a bill that mounts by about $15 billion a year. Samaras has vowed these austerity measures will be the last, although that promise has been ridiculed by his major opposition party, the Coalition of the Radical Left (SYRIZA) as a fairy tale.
The measures are far sweeping and include:

  • Abolition of already drastically-reduced summer, Easter and Christmas bonuses
  • Eliminating all extra bonuses to pensions and civil servants
  • New pension cuts of up to 25 percent
  • Cutting so-called “special salaries” of police, judiciary, military officers, state hospitals’ medical staff, university educators and diplomats up to 30 percent
  • Laying off 2,000 workers at 75 percent pay for a year before firing them if new positions can’t be found
  • Abolishing state-allocated social benefits – to be replaced by benefits depending on income criteria
  • Freezing from 2013-16, payment of all target-related incentives to public sector workers
  • Setting a 1,900 euros ($2,444) ceiling for wages of all employees in agencies and organizations in the general government
  • Slashing remuneration to employees in municipal or regional authorities, as well as further cuts in wages of ministry employees
  • Cutting private sector pensions 25 percent
  • Raising the retirement age from 65 to 67
  • Abolishing supplemental pensions that many elderly depend on, which could lower pensions for some to 300 euros, or $385 a month – before taxes
  • Limiting benefits for the spouses of deceased pensions
  • Abolishing pensions for Parliament deputies or municipal authorities elected under the new law
  • Setting income criteria for allocation of family benefits
  • Liberalizing certain professions and service markets, including auditors, mini-van tourist services by hotels, tobacco product vendors, baby milk sales, accountants, private education, dental technicians, newspaper/magazine vendors, truck leasing services etc.
  • Requiring higher co-payments for hospitalization, drugs and prescriptions, including a 25 euros fee ($32.17) starting in 2014 to be seen at a hospital, which could bar scores of thousands of the poor and unemployed from health care
  • Requiring 85 percent of drugs to be available in generic prescriptions. If patients prefer a brand-name, they will have to pay the difference in the cost
  • A number of other measures designed to roughly halve the monthly budget for pharmaceuticals and have pharmaceutical companies and pharmacies carry a greater proportion of the costs.
  • The cheaper brands of cigarettes will cost about 20 cents more per pack, while the price of rolling tobacco will go up by about 85 cents. There will be no hike in the price of higher-priced brands
  • The special consumption tax on liquefied petroleum gas (LPG) used as fuel for vehicles is set to grow from 20 to 33 euro cents per liter.
  • Entrance tickets to casinos will drop in price from 15 euros ($19.30) to just 6 euros ($7.72), with 4.80 euros ($6.18) of that going straight into the public coffers, while the state’s participation in the gross profits of casino games will rise by two percentage points.
  • The Value-Added Tax (VAT) return rate for agricultural products is seen declining from 11 percent to 6 percent – a measure which will come into effect in the new year – while diesel used by farmers will see a tax rise from 21-66 cents per liter
  • The bill allows for the free access of independent gasoline stations to refineries, lifting restrictions on fuel trucks, while all vehicles or vessels that carry fuel will have GPS installed so that authorities can keep track of their activities
  • The ceiling for cash transactions will be raised from 1,500 to 3,000 euros ($1,930-$3,860) with transactions above that level only to be conducted via checks or bank accounts. However, it is not clear how this measure will do anything to help in the battle against tax evasion
  • An extraordinary tax of between 25 and 35 percent on solar energy production plants, depending on the time the project was hooked up to the national electricity grid. It will be calculated on the turnover from July 1, 2012, to June 30, 2014, although this may be extended by another year
  • Creating the position of a General Secretary for State Revenues, who will be chosen by the Cabinet and will serve for a five-year term, with the possibility of a second five-year term as well
  • The position of the general secretary for tax and customs issues will be abolished
  • A tax of 140 million-200 million euros ($180-$257 million) from 2013 to 2016 on the shipping industry that was originally slated to be voluntary
    (Sources: Kathimerini, Athens News/dv, AMNA)

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