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Greece Spurns Lenders' Demands for Tax Increases, Income Cuts

  • Reuters

Greece's prime minister, Antonis Samaras, speaks at the annual conference of the American-Hellenic Chamber of Commerce in Athens, Dec. 2, 2014.

Greece's prime minister, Antonis Samaras, speaks at the annual conference of the American-Hellenic Chamber of Commerce in Athens, Dec. 2, 2014.

Greece's prime minister said Tuesday that his country had rejected its international lenders' demands for tax increases and income cuts next year, arguing that such measures would be disastrous for the country in the wake of a deep economic recession.

Budget talks with inspectors from the European Union and International Monetary Fund have dragged on for weeks without agreemen, leaving Athens short of time to wrap up its final bailout review by a Dec. 8 deadline and pave the way for an early exit from the bailout by the end of the year.

"Greece has done a lot already," Prime Minister Antonis Samaras said during an economic conference.

"As we are negotiating our final review, several conditions have been set, including tax rises and income cuts, but we have rejected them," he said, adding without elaboration that the government had accepted some other measures instead.

An increase in the value-added tax rate for hotels and pension reforms are among the measures being discussed with lenders, government officials have said.

The finance ministry acknowledged Tuesday that lenders had been demanding additional measures in the belief that Greece would fall short of its budget target next year. It said Athens disagreed with the assumption of a shortfall.

If the government's estimates for a balanced 2015 budget are wrong, Samaras said, Greece will take extra measures within the year. He said political uncertainty was weighing on the negotiations and was the country's biggest problem.

Greece could face early elections next year, depending on the outcome of a separate vote to elect a president. The latest opinion poll by the Pulse agency showed the main opposition, the radical leftist Syriza party, would win with 29.5 percent of the vote if national elections were held now.

Speaking at the same conference earlier in the day, Syriza leader Alexis Tsipras promised that if elected, he would swiftly scrap the country's EU/IMF bailout without waiting for the outcome of talks with lenders.

"We will replace the bailout with [Syriza's] program from the initial days of our government, before and regardless of the outcome of the negotiation," Tsipras said.

"This program aimed at healing our wounds and restarting the economy will be implemented irrespective of, and beyond, the process of tough negotiations, which we know won't be easy."

Syriza's plan to reverse austerity cuts include hiking the minimum wage and reinstating Christmas pension bonuses.

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