Greek Lawmakers Pass Tax Bill Required for EU, IMF Bailout Funds

Greek lawmakers passed a tax bill seeking to raise state revenue by 2.3 billion euros ($3.1 billion), part of commitments demanded by international creditors in order to continue to receive further bailout funds.

“The tax bill is a fiscal necessity, a prerequisite in order for us to get the next loan tranche,” Finance Minister Yannis Stournaras told lawmakers ahead of today’s vote in comments broadcast live on Vouli TV.

Euro-area finance ministers approved 49.1 billion euros of rescue payments to Greece on Dec. 13 to keep the recession-wracked country solvent, with 34.3 billion euros paid immediately. Greece must meet certain conditions to get further payments in early 2013, Jean-Claude Juncker, head of the group of 17 euro-area finance chiefs, said at the time.

With the tax changes “we’re significantly broadening the tax base via the compulsory declaration of all income from all citizens and through the full inclusion in the tax system of those who up until now have been taxed less,” Stournaras said.

Stournaras said earlier this month that the tax bill is the most decisive prior action required for further bailout funds to be disbursed. The bill comprises 24 changes, including reducing the number of tax brackets to three from eight with a new top rate of 42 percent for individuals who earn 42,000 euros or more a year.

Other changes include cutting the corporate tax rate to 32.8 percent from 40 percent and imposing a 20 percent capital gains tax on Greek stocks from July 1. The changes place more of the payment obligation on businesses, especially the self-employed, reducing the burden on employees and pensioners by 100 million euros compared with 2012, Stournaras told lawmakers.

The bill had to be voted on before a meeting later this month of euro-area finance ministers who will determine whether to release Greece’s next tranche of funds, Stournaras said on Jan. 4.

Another tax bill that will include measures to tackle tax evasion will be submitted to parliament for approval by May, Stournaras said before today’s vote.

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