ATHENS, Dec 6 (Reuters) - Greece plans to tax businesses and
middle incomes more in an effort to raise revenues from a tax
reform bill it has long-promised its international lenders, a
senior finance ministry official said on Thursday.
The European Union and International Monetary Fund have
demanded the cash-strapped country reform a tax administration
widely seen as corrupt and ineffective before they disburse
about 9 billion euros ($11.7 billion) in aid early next year.
But Greece has so far failed to make real progress and
disagreements over who should be taxed and by how much has
created a rift in Prime Minister Antonis Samaras's coalition
government, a mix of leftists and conservatives.
The finance ministry plans to raise the corporate tax rate
on profits to 26 percent from 20 percent, said the official, who
declined to be named. In dividends, the rate would fall to 10
percent from 25 percent currently.
The ministry's proposals include reducing tax brackets to
three from eight and imposing a 40 percent top rate on incomes
above 40,000 euros. Currently, the 40 percent tax rate applies
to those earning over 60,000 annually and those earning over
100,000 euros are taxed at 45 percent.
"The new tax system is simpler, fairer and geared toward
growth," the official said.
The proposals offer some relief to low incomes, as tax
exemptions for wage earners and pensioners would be increased to
9,000 euros from 5,000 euros currently for those earning up to
25,000 euros.
Greek press had speculated that the government planned to
apply a 45 percent top tax rate on incomes above 26,000 euros
and abolish tax credits for dependent children, deepening anger
among a public worn down by five years of recession.
On Tuesday, Samaras was forced to dismiss talk that his
government had such plans in an effort to bridge differences
among his ruling coalition.
The new tax system must generate about 1.1 billion euros of
additional revenues from 2014, as part of a 13.5 billion euro
austerity package that Greece passed last month to comply with
the terms of its bailout.
Samaras has held several rounds of talks with finance
ministry officials and Finance Minister Yannis Stournaras was
meeting party negotiators on Thursday to discuss the bill before
releasing it for public consultation.
Samaras's coalition allies have threatened to block the deal
in parliament, saying it would further strain honest taxpayers
instead of cracking down on wealthy tax evaders.
"We want our country to fulfill its obligations (towards
lenders)" the leader of the co-ruling PASOK socialists,
Evangelos Venizelos, said on Thursday.
"But this cannot happen at the expense of wage earners and
pensioners, at the expense of children, at the expense of the
young unemployed and the self-employed," he said.