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Greeks earning ?42,000 to be taxed at top rate

Thursday - 12/13/2012, 9:20pm  ET

DEREK GATOPOULOS
Associated Press

ATHENS, Greece (AP) -- Greeks earning more than EUR42,000 ($55,000) per year will now be taxed at a new top rate of 42 percent, under a major new tax reform bill submitted to the country's parliament late Thursday.

Under the new guidelines, the 42 percent top tax rate and earnings threshold replaces the previous level of 45 percent for incomes above EUR100,000 ($130,770). The new rate is part of a simplification of the country's tax rules. There are currently eight tax bands ranging from 18 percent to 45 percent. These will be replaced by three tax rates: 22 percent, 32 percent and 42 percent.

Greeks earning less than EUR25,000 ($32,700) a year are set to benefit from the new system in spite of the raise in the basic tax band as the government is proposing to raise the threshold on which income is taxed.

The new tax rates, part of the austerity measures demanded by the country's international rescue lenders, were submitted to parliament hours after the finance ministers from the 17 European Union countries that use the euro agreed in Brussels to restart rescue loan payments. Greece is in line to get EUR49.1 billion ($64 billion) between now and March, with EUR34.3 billion of that amount due in the coming days.

Greek finance minister, Yannis Stournaras, presented his colleagues form the other 16 European Union details of his country's long-awaited tax overhaul before the bill was submitted.

In return for the rescue loans, Greece's international lenders have insisted on a series of reforms, tax raises and spending cuts.

But the successive hikes in taxes, required to meet deficit-cutting targets, have hammered the economy, pushing unemployment up to 26 percent, and with more than 20 percent of the population now officially living in poverty -- earning less than EUR7,200 ($9,420) per year.

Conservative Prime Minister Antonis Samaras promised the speedy settlement of state debts and the recapitalization of the country's troubled banks with the money from the new loan installments, while spending EUR11.3 billion ($14.78 billion) on a debt buyback scheme.

"Today ends a long and difficult period of anxiety for Greece," Samaras told Greek reporters in Brussels.

"It ends the rumors, blackmail and pressures on our country to exit the euro.
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.