Repeating his belief that his wobbly coalition government has saved Greece from being forced out of the Eurozone by securing more international aid, Prime Minister Antonis Samaras said that the country has to stick to harsh austerity measures and reforms to avoid a “relapse.”
In interview with the Sunday To Vima newspaper, he said, “I believe the great danger (of a euro exit) has passed,” The New Democracy Conservative leader added that, “Drachmaphobia seems to have receded completely,” referring to the notion that Greece might have had to resort to going back to its its ancient drachma as a currency.
But with the Parliament this coming week set to decide whether to investigate two former finance ministers, including PASOK Socialist leader, one of Samaras’ partners, for their handling of a list of Greeks with secret Swiss bank accounts that hasn’t been checked for tax evasion, the government is on the defensive again.
Samaras preferred to stick with economic issues, saying that, “There can be no letup in our effort, because there is the risk of a relapse.” That came after the Parliament approved big new tax hikes, primarily on the middle class that Samaras said he would protect, as part of a $17.45 billion spending cut and tax hike plan to satisfy its Troika of lenders, the European Union-International Monetary Fund (EU-IMF-ECB) which has approved a new infusion of $69 billion in rescue loans for the debt-choked economy.
The new tax plan, which sets a 42 percent tax for those earning more than 42,000 euros ($56,037) nearly three times higher than the same bracket for income-earners in the United states, also ends tax breaks for the self-employed, a category blamed for a large part of the tax evasion that has plagued state finances for decades.
On Jan. 14, the government will seek approval for another round of reform legislation tied to Greece’s next loan installments. The bill introduces closer state budget monitoring and gives greater flexibility to banks to raise fresh capital. It also regulates civil service pay cuts and layoffs and finalises a state debt buyback.
The opposition, led by the Coalition of the Radical Left (SYRIZA) said the government is at war with the middle class which, along with pensioners and the poor has been hit hardest by pay cuts, tax hikes and slashed pensions while the Troika said almost nothing has been done to catch tax cheats.
The coalition government, which includes the tiny Democratic Left, has lost 16 lawmakers since being elected and is down to 163 seats in the 300-member Parliament, still a comfortable majority and enough to follow Samaras’ orders. He said it’s essential to do whatever the Troika says as Greece needs a scheduled 9.2 billion euros ($12.27 billion) loan set for the end this month, along with another 2.8 billion euros ($3.73 billion) each in both February and March.
Eurozone finance ministers will decide on Jan. 21 whether to release the next installment and IMF officials are also expected to decide sometime this month whether to give their okay in its next share of the new bailout, some 3.4 billion euros, or $4.53 billion. Without the money, Greece would have difficulty meeting its obligations as austerity has worsened a recession now in its sixth year and expected tax revenue targets are far off projections.
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