Greek parliament to vote on tax, pension reforms before Eurogroup meeting

Reuters News
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Posted: May 05, 2016 9:44 AM

By Renee Maltezou

ATHENS (Reuters) - Greek lawmakers are expected on Sunday to vote on a raft of unpopular tax and pension reforms that Greece hopes will help it convince creditors to approve the release of badly-needed bailout cash.

Greece needs the bailout funds to pay IMF loans, ECB bonds maturing in July and growing state arrears, but these are subject to it passing a review that includes required changes to its tax and pension laws.

Parliament is due to vote on the bill before euro zone finance ministers meet on Monday to try to unblock the review which has stalled mainly due to a rift among its international creditors on Greece's fiscal progress.

Athens hopes a parliamentary approval will help convince other EU member states that Greece has made enough progress and does not need to implement further belt-tightening.

A parliamentary committee was on Thursday reviewing provisions of the bill which aims to boost tax revenues and slash pension spending from its current level of 17 percent of GDP annually.

The proposed legislation would raise tax on corporate dividends to 15 from 10 percent, increase income tax for high earners while lowering tax free thresholds and sharply increasing a so-called 'solidarity tax' -- which goes straight into state coffers -- across the board.

It also introduces a national pension of 384 euros a month after 20 years of work, phases out of a benefit for poor pensioners (EKAS) and recalculates pensions.

The vote will test Prime Minister Alexis Tsipras' popularity during the tough negotiations with the lenders.

His left-led government has a fragile majority of 153 lawmakers in the 300-seat parliament. Labor unions have called for a 48-hour strike on May 6-7 and protesters are expected to rally outside parliament on the day of the vote.

Greece and its creditors have agreed on a package of reforms worth 3 percent of its economic output but still disagreed on contingent measures, to be implemented only if needed, to make sure the country reaches agreed fiscal targets in 2018.

Tsipras' government was re-elected in September on promises to ease the pain of austerity for the poor and protect pensions after he was forced to sign up to a new bailout in July to keep the country in the euro zone.

(Editing by Raissa Kasolowsky)