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What are the Greek Austerity measures?
ILW
Posts: 18,333 Forumite
The Greek people are very upset about having austerity opposed on them in return for a bailout.
As far as I can see, these measure seem to consist of:
Having to work into their sixties before getting state pension.
Cutting benfits levels to around the same as the rest of Europe.
Having to pay similer levels of tax as the rest of Europe.
Is it a case or austerity of have they just got used to a rather cushy lifestyle that they could never afford and believe they should go on enjoying it whilst others pay the bills?
As far as I can see, these measure seem to consist of:
Having to work into their sixties before getting state pension.
Cutting benfits levels to around the same as the rest of Europe.
Having to pay similer levels of tax as the rest of Europe.
Is it a case or austerity of have they just got used to a rather cushy lifestyle that they could never afford and believe they should go on enjoying it whilst others pay the bills?
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Comments
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We have reached the stage in Greece where the real question has become whether they can even physically implement whatever their Parliament passes.
If the Greek state starts to collapse with laws becoming unenforeable because 100% of the population are ignoring them this will put the EU in an even bigger mess: and possibly a terminal one - unless Germany is going to invade and impose its own law on the Greeks by force!0 -
The bad news for the Greek populace. puts the UK's austerity measures into perspective.
Taxation.
Taxes will increase by 2.32bn euros this year, with additional taxes of 3.38bn euros in 2012, 152m euros in 2013 and 699m euros in 2014.
A solidarity levy of between 1% and 5% of income will be levied on households. It will be raised twice next year.
The tax-free threshold for income tax will be lowered from 12,000 euros to 5000 euros, rather than the original plan of 8,000 euros.
There will be higher property taxes.
VAT rates are to rise: the 19% rate will increase to 23%, 11% becomes 13%, and 5.5% will increase to 6.5%.
The VAT rate for restaurants and bars will rise to 23% from 13%.
Luxury levies will be introduced on yachts, pools and cars.
Some tax exemptions will be scrapped.
Excise taxes on fuel, cigarettes and alcohol will rise by one third.
Special levies on profitable firms, high-value properties and people with high incomes will be introduced
Public Sector Cuts
The public sector wage bill will be cut steadily to shrink it by more than 2bn euros by 2015.
Nominal public sector wages will be cut by 20%.
Wages of employees of state-owned enterprises will be cut by 30% and there will be a cap on wages and bonuses.
The number of civil servants to be suspended on partial pay will rise to 30,000 by the end of this year, from 20,000 planned initially. They will receive 60% of pay for one year, having been promised a job for life.
All temporary contracts for public sector workers will be terminated.
Only one in 10 civil servants retiring this year will be replaced and only one in 5 in coming years.
Spending Cuts
Defence spending will be cut by 200m euros in 2012, and by 333m euros each year from 2013 to 2015.
Health spending will be cut by 310m euros this year and a further 1.81bn euros in 2012-2015, mainly by lowering regulated prices for drugs.
Public investment will be cut by 850m euros this year.
Subsidies for local government will be reduced.
Education spending will be cut by closing or merging 1,976 schools.
Cutting Benefits
Social security will be cut by 1.09bn euros this year, 1.28bn euros in 2012, 1.03bn euros in 2013, 1.01bn euros in 2014 and 700m euros in 2015.
There will be more means-testing and some benefits will be cut.
Monthly pensions above 1,000 euros to be cut by 20%
Existing retirees aged under 55 to lose 40% of any pensions over 1,000 euros.
The government hopes to collect more social security contributions by cracking down on evasion and undeclared work.
The statutory retirement age will be raised to 65, 40 years of work will be needed for a full pension and benefits will be linked more closely to lifetime contributions.
Privatisation
The government aims to raise 50bn euros from privatisations by 2015, including:
Selling stakes this year in the betting monopoly OPAP, the lender Hellenic Postbank, port operators Piraeus Port and Thessaloniki Port as well as Thessaloniki Water.
It has agreed to sell 10% of Hellenic Telecom to Deutsche Telekom for about 400m euros.
Next year, the government plans to sell stakes in Athens Water, refiner Hellenic Petroleum, electricity utility PPC, lender ATEbank as well as ports, airports, motorway concessions, state land and mining rights.
It plans further sales to raise 7bn euros in 2013, 13bn euros in 2014 and 15bn euros in 2015.0 -
Thrugel, thank you for that excellent post.
Sick to the back teeth of people suggesting it's all about retirement.0 -
Problem is some things are hard to gauge EG income tax threshold
Cutting it to €5,000 from €12,000 seems not a million miles away from here (£6470).
But It depends on what the average wage is and cost of living.
Many of the cuts in greece look massive but from where they were from they look to be generous in the past.
It is very hard to judge from the outside if this is making them the poor man of europe or just bringing down over generous policies from the past?
Unemployment is a massive problem for them, hard to see that changing without devaluing in reality though.
In reality to run up the debt it must have meant that income vs expenditure has been way out for some time. Would be interesting to know how this was run up.0 -
Problem is some things are hard to gauge EG income tax threshold
Cutting it to €5,000 from €12,000 seems not a million miles away from here (£6470).
But It depends on what the average wage is and cost of living.
Oh come on. Look at the cut in wages that goes hand in hand with the rise in tax.
You are comparing apples with oranges here. It's got nothing to do with how much tax we pay in the UK.
It's all to do with a 60% cut in the tax threshold. That would hurt anyone as you'd have less wages. Thats not hard to gauge at all.
Add in wage cuts and it's pretty dire.
Comparing it to the UK tax free cut off is completely pointless and completely misses the point.0 -
Thrugelmir wrote: »The bad news for the Greek populace. puts the UK's austerity measures into perspective.
Taxation.
Taxes will increase by 2.32bn euros this year, with additional taxes of 3.38bn euros in 2012, 152m euros in 2013 and 699m euros in 2014.
A solidarity levy of between 1% and 5% of income will be levied on households. It will be raised twice next year.
The tax-free threshold for income tax will be lowered from 12,000 euros to 5000 euros, rather than the original plan of 8,000 euros.
There will be higher property taxes.
VAT rates are to rise: the 19% rate will increase to 23%, 11% becomes 13%, and 5.5% will increase to 6.5%.
The VAT rate for restaurants and bars will rise to 23% from 13%.
Luxury levies will be introduced on yachts, pools and cars.
Some tax exemptions will be scrapped.
Excise taxes on fuel, cigarettes and alcohol will rise by one third.
Special levies on profitable firms, high-value properties and people with high incomes will be introduced
Public Sector Cuts
The public sector wage bill will be cut steadily to shrink it by more than 2bn euros by 2015.
Nominal public sector wages will be cut by 20%.
Wages of employees of state-owned enterprises will be cut by 30% and there will be a cap on wages and bonuses.
The number of civil servants to be suspended on partial pay will rise to 30,000 by the end of this year, from 20,000 planned initially. They will receive 60% of pay for one year, having been promised a job for life.
All temporary contracts for public sector workers will be terminated.
Only one in 10 civil servants retiring this year will be replaced and only one in 5 in coming years.
Spending Cuts
Defence spending will be cut by 200m euros in 2012, and by 333m euros each year from 2013 to 2015.
Health spending will be cut by 310m euros this year and a further 1.81bn euros in 2012-2015, mainly by lowering regulated prices for drugs.
Public investment will be cut by 850m euros this year.
Subsidies for local government will be reduced.
Education spending will be cut by closing or merging 1,976 schools.
Cutting Benefits
Social security will be cut by 1.09bn euros this year, 1.28bn euros in 2012, 1.03bn euros in 2013, 1.01bn euros in 2014 and 700m euros in 2015.
There will be more means-testing and some benefits will be cut.
Monthly pensions above 1,000 euros to be cut by 20%
Existing retirees aged under 55 to lose 40% of any pensions over 1,000 euros.
The government hopes to collect more social security contributions by cracking down on evasion and undeclared work.
The statutory retirement age will be raised to 65, 40 years of work will be needed for a full pension and benefits will be linked more closely to lifetime contributions.
Privatisation
The government aims to raise 50bn euros from privatisations by 2015, including:
Selling stakes this year in the betting monopoly OPAP, the lender Hellenic Postbank, port operators Piraeus Port and Thessaloniki Port as well as Thessaloniki Water.
It has agreed to sell 10% of Hellenic Telecom to Deutsche Telekom for about 400m euros.
Next year, the government plans to sell stakes in Athens Water, refiner Hellenic Petroleum, electricity utility PPC, lender ATEbank as well as ports, airports, motorway concessions, state land and mining rights.
It plans further sales to raise 7bn euros in 2013, 13bn euros in 2014 and 15bn euros in 2015.
So basically ILW's OP was about as wrong as you can get.
With austerity measures that severe, it's no wonder the Greeks are rioting.
Nor any wonder the economy is in a death spiral.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
Graham_Devon wrote: »It's all to do with a 60% cut in the tax threshold. That would hurt anyone as you'd have less wages. Thats not hard to gauge at all.
No it is not hard to gauge at all, but it seems hard for some to gauge is this because it was massively over generous in the past? I don't know but something had got to be out somewhere to run up the debt.
It will hurt, but addressing the problem has to happen at some time. If it is because they are under taxing default or bailout will not change the fact they will have to change the tax rules.
There is no magic way out, they still need to balance their budget regardless of bailout or default.0 -
Graham_Devon wrote: »Thrugel, thank you for that excellent post.
It was, but I am sure he thanks the BBC.
http://www.bbc.co.uk/news/business-139404310 -
No it is not hard to gauge at all, but it seems hard for some to gauge is this because it was massively over generous in the past.
It will hurt, but address has to happen at some time. If it is because they are under taxing default or bailout will not change the fact they will have to change the tax rules.
There is no magic way out, they still need to balance their budget regardless of bailout or default.
Then why says it's hard to gauge?
And yes, there is no way out. But the sooner they default, the sooner they can start dusting down. That's been my point for quite some time. Just applying ever more taxation and ever lower wages isn't going to fix the problem. The austerity is severe. They cannot cope with this level of austerity. Neither will it sort out the debt issue. It is pointless.0 -
Cutting it to €5,000 from €12,000 seems not a million miles away from here (£6470).
But It depends on what the average wage is and cost of living.
Next tax year 2012/13 the personal allowance rises to £8,105. As the move to a £10k threshold continues.
The counter is that the 40% tax band will commence at £34,370.
So there is a rebalancing in progress. As more and more people find part of their income subject to higher rate tax.0
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