Politics: Samaras outlines plan to jumpstart Greek economy; pay debt

Main opposition New Democracy leader Antonis Samaras on Thursday outlined his party's programme to restart the ailing Greek economy, based what he said were seven basic steps:
Samaras, a former ND minister who left the party in 1993 to establish his own political entity, only to return back and serve again as a ND deputy and minister, said the first goal is none other than to cut tax rates.
He recommended introduction of a common 15 pct tax rate for all enterprises and a 15-pct tax on dividends (from 25 pct currently). The highest tax rate would fall to 40 pct, from 45 pct currently, and would not exceed 30 pct in a period of three years, he said.

Value added tax (VAT) will be cut to 19 pct (from 23 pct); to 9.0 pct from 13 pct and for tourism-related enterprises the VAT rate would be set at a low 4.5 pct.

Moreover, Samaras said his plans calls for the special fuel consumption tax to be abolished in two years. He also recommended cutting employers' social insurance contributions by 25 pct, along with imposing very strict sanctions for informal labour and gradually abolishing taxes for third parties.

On another front, the ND leader emphasised what he called for the abolition of the obligation of reporting the financial means in the purchase of residences; a freeze on real estate objective value taxes and a re-examination of all property statements of office-holders who have served as ministers from 1974 onwards.

More proposals include:

- introducing a simplified and stable tax system,
along with strict sanctions for tax-evaders

- legalising all illegal buildings and strictly prohibiting any further illegal building activity

- repayment of all state debt to individuals and enterprises

- acquiring a pledge by domestic banks to distribute
20-30 pct of state guarantees to the real economy. Greek banks have received 63 billion euros so far in guarantees and the government recently added another 30 billion euros in state support

"I asked Mr. (Jean-Claude) Trichet to extend measures in support of banks' liquidity for next year," Samaras said.
Additionally, Samaras cited the subsidization of first home purchases by two percentage points, with the aim to restart building activity, as well as improving a residential energy upgrading programme; raising absorption of Community funds and boosting the public investment programme.
These measures would raise 8.0 billion euros in the first two years, he said.
Samaras said action should be taken to overturn what he called the unfair treatment of low-pension earners and to restore financial support to families with more than three children.
The New Democracy leader said the steps to restart the economy will cut the country's fiscal deficit by 2.0 pct, while he added that measures to cut public overspending should be taken, such as those generated by state hospital costs; freezing new hirings in the public sector for three years (to be followed by one hiring for five retirements), cutting benefits to higher income earners in public sector enterprises.
Turning to the political side, he strongly criticised the ruling PASOK government for introducing a new cycle of overspending and of increasing the "party-affiliated state" as he called it, while he pledged that implementation of ND's programme would result in a decrease of the fiscal deficit to 1.0 pct of GDP in three years.
Samaras said institutional measures will support this programme, with priority given to combating bureaucracy.

Pointing to an issue related to foreign policy, Samaras made a special mention to declare the country's Exclusive Economic Zone, something he said PASOK was "afraid of doing".

New Democracy has recommended making a better management of the state's real estate property and said that such a plan needed time to be implemented, Samaras said, adding that his party was not opposed to the sale of individual property, while he recommended the exploitation of the Church's real estate as well. "Exploiting the state's property means convincing investors. Without restarting the economy there cannot be an exploitation of the property, it will be a sell-off," he said.

Referring again to the economic side, he reiterated his party's support for privatisations, but stressed that the current market value of all public sector enterprises was below 6.0 billion euros.

"If the government begins selling equities it will further drop prices," he said, adding it was a mistake to sell a 17-pct share in the Public Power Corp.

"We will proceed with a privatisation of PPC in a modern fashion by opening up the energy market first. Energy distribution and transport networks will remain under state control and we will seek a strategic investor for parts of PPC," he said.

The state will seek strategic investors for other public sector enterprises as well, the ND leader said, while he opposed plans to sell OPAP, the state-run betting and lottery pools.

Speaking before a packed hall of the party's highest ranking deputies and cadres, and with the address carried on several national television stations, Samaras also strongly criticised the role of labour unions in the country, particularly those representing employees in public sector enterprises.

"We must change the terms of the memorandum," Samaras said in reference to the 110-billion-euros bailout, adding that some people were betting on our bankruptcy. "Greece cannot afford any more instability in a sensitive region," he said, while he reminded that Ireland and Portugal achieved better terms after negotiating with the troika, something that the Papandreou government failed to do.

"I will negotiate the terms of restarting the economy," Samaras said and noted that he will negotiate any idea offering relief to the debt problem. Along these lines, he reiterated a proposal for a Eurobond and the possibility of buying state debt in the secondary bond market.

"Any extension of the repayment period is not painless and any rescheduling of the debt needs a restart of the economy," he said.

Furthermore, he accused that prime minister of lacking any plan. "The new memorandum is discussed because the first memorandum failed ... I took the risk of resisting to the memorandum when many were saying it was the only way, and I expressed our views abroad. Our criticism was justified and today we recommend a restart," the ND leader said, while he said it would be a "crime" to offer his consensus to a mistake.
Finally, he said his party was ready for snap elections if the government was to decide such a move.

Gov't reaction

Shortly after, government spokesman Giorgos Petalotis commented on the proposals unveiled by Samaras. The former clarified that many of the ND leader's proposals have already been implemented by the government while others are unrealistic or need further processing.

Petalotis added that Samaras does not accept the memorandum - for which the ND policy is responsible, as he charged - as the country's only and necessary way out of the crisis.

He issued again an invitation for consensus, stressing that it is a "standing invitation to ND which has its share of responsibility for the state the country is in".

Petalotis called on the main opposition party to realise its responsibility and follow the example of Portugal where the opposition parties signed the memorandum.

The government spokesman left open the likelihood for proposals made by Samaras to be studied and implemented.

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