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Greece alters tax code to appease lenders

Greece has given the green light to an unpopular package of tax reforms, in order to meet requirements of international creditors. Opponents say the changes will bite the less well off, without scratching the wealthy.

ILLUSTRATION - Eine Euro-Münze, aufgenommen am 10.10.2012 vor dem Parlament in Athen. Die griechische Regierung soll mehr Zeit für die Sanierung des maroden Staatshaushalts erhalten. Foto: Hannibal/dpa +++(c) dpa - Bildfunk+++

Symbolbild Griechen bekommen Zeit und Geld

Greece's Parliament early on Saturday approved controversial new tax changes designed to boost government revenues, as part of conditions laid down by foreign lenders supplying the economically-troubled country with emergency loans.

"It is a bill of fiscal necessity and responsibility, required for us to get our next loans tranche," Finance Minister Yannis Stournaras said to lawmakers.

The law, which has backing from all three partners in Greece's coalition, includes an extension of the tax base to factor in groups like low-income farmers. It also simplifies tax scales, does away with a number of tax exemptions and makes changes to family benefits.

Letting off the rich?

But opponents branded the bill as another example of the government opting to squeeze Greece's already austerity-hit lower and middle class, rather than coming down harder on the wealthy and on tax evaders.

"This is a bill that puts into action a plan of destitution. Seven hundred thousand Greeks can't pay their electricity bills, there are 3 million poor people in our country and 57 percent of our youth is unemployed," said Panos Kammenos, leader of the Independent Greeks party.

Although more people will fall into the upper bracket - those earning more than 42,000 euros ($56,000) per annum rather than those above the previous 100,000 euros threshold - the top tax rate will actually decrease from 45 percent to 42 percent.

Those with an income of up to 25,000 euros will be taxed by 22 percent and those bringing in between 25,000 and 42,000 euros will be taxed 32 percent.

sej/msh (AP, Reuters)