Business, Economics and Jobs

Greece passes controversial new tax hikes


Protesters shout slogans during a 24-hour general strike in Athens on February 7, 2012. A general strike gripped Greece in protest against new austerity measures demanded with increasing urgency by the European Union as part of a debt rescue deal with banks.


Aris Messinis

Greece's parliament has approved new tax hikes to keep on track with its repayments to international creditors, despite violent protests and continued opposition to austerity measures.  

The increases introduce a new top tax rate of 42 percent for citizens who earn over 42,000 euros, or $56,000, a year, BBC News reported, and expands the country's taxpayer base to include low-earning farmers, among other groups.

The bill also cuts the corporate tax rate to 32.8 percent from 40 percent, and will tax Greek stocks by 20 percent, according to the Greek Reporter

Athens owes the European Union, European Central Bank, and the International Monetary Fund (IMF) some $45.5 billion in frozen loans so far, and is expecting another $19.9 billion in the coming months, the Associated Press reported

The new tax increases aim to generate $1.33 billion in additional revenue a year, as negotiated with the so-called Troika of lenders, according to the Wall Street Journal

"Every euro we collect from the extra fiscal revenues sought, is a euro saved from salaries, pensions and social benefits," said Finance Minister Yannis Stournaras speaking in Parliament earlier this week. "We are making the savings in a socially just fashion.”

Greek opposition forces argue that the new tax hikes will further burden the country's already-ravaged middle class. 

"We are not in favor of taxes," Deputy Finance Minister Giorgos Mavraganis said, according to the AP. "But in the current situation we must lead the country out of its impasse. Once we achieve stability we will proceed to cut taxes and simplify the system."

More from GlobalPost: Greek austerity bill approved by parliament despite protests