Is there political manoeuvring to control the gas?

Greek conservative leader Antonis Samaras promised on Sunday to cut taxes and increase social spending, without missing the targets set by international lenders, if he wins the May 6 national election.

Samaras, the front runner in the race, has often criticised the terms of the bailout that saved Greece from bankruptcy, and said he would spend 550 million euros ($726 million) on social relief if elected.

"Our economic plan's priorities are growth and recovery," he told a crowd of supporters. "Without growth ... the economy will collapse." He has said the bailout terms underestimated the severity of the recession in Greece.

Opinion polls show his New Democracy party coming first but failing to win outright, forcing Samaras to seek coalition partners to form a government. The only other major party supporting the IMF/EU bailout plan is the Socialist PASOK, running second in popularity.

Samaras, presenting his economic programme two weeks before the vote, said taxes should start falling, starting with a single corporate tax rate of 15 percent, down from 23 percent now, to stimulate consumption and hiring and spur economic recovery after five straight years of recession.

At some point in the future, the top VAT rate should be cut to 19% from 23% now, and the top income tax rate to 32% from 45%, he said.

This would reverse some of the austerity measures the country agreed to last month to obtain its second EU/IMF bailout in two years, avoid bankruptcy and remain in the euro.

But Samaras said he would respect the aim of cutting the budget deficit to 7.3% of gross domestic product this year and further beyond, from an estimated 9.3% in 2011.

"We fully accept the deficit reduction target... and privatisations," he said. "We have identified equivalent savings worth twice as much (as the 550 million euros of social spending)."

The spending increases on low pensions, farmers and child benefits would be paid for by savings in state-run companies and a tax on new games created by gambling firm OPAP, which is due for privatisation, he said.

Financial markets worry about euro zone countries that stray from agreed austerity measures. Spanish bond yields rose earlier this month, reigniting Europe's debt crisis, after the new conservative government revised upwards the budget deficit goal its predecessors had agreed with the EU.

In March, Samaras visited Spanish leader Mariano Rajoy and said their countries needed recovery measures.

Any changes to Greece's bailout plan would need the agreement of the EU and the IMF. The 130 billion euro rescue package almost fell apart in February, when Athens and its lenders briefly disagreed over how to plug a modest 325 million euro gap in the 2012 budget.


New Democracy opposed Greece's first EU/IMF bailout in May 2010. But the party changed tack last November, joi ning its Socialist rivals in a short-lived government to negotiate the second bailout.

This hurt the conservatives' popularity, and all opinion polls predict that Samaras will fall far short of his goal of winning a parliamentary majority on May 6. This leaves a renewal of the current coalition with the Socialists as the only viable option.

Samaras said he would cut government waste to generate the bulk of the 11.7 billion euros in savings for 2013 and 2014 that the new government must spell out in June, as agreed with lenders.

"Waste is abundant," he said, while ruling out across-the-board wage and pension cuts on top of those already agreed with the country's lenders.

Socialist leader Evangelos Venizelos, who led the bailout negotiations as finance minister, has vowed to spread out the 11.7 billion euro savings over three years to 2015, instead of two, to soften their impact on the economy.

Source: Financialmirror

Published on 23 April, 2012
|||Greek conservatives pledge tax cuts, social spending
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