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Victoria Mindova 

The new Minister of Finance Evangelos Venizelos said he expects Greek banks and social funds to participate in the voluntary program for rescheduling the payments maturing in 2015. The measure known as the Vienna Treaty suggests that private owners, who bought Greek government bonds maturing in the next three to four years would voluntarily consent to wait for Greece to solve its financial problems. The main objective is the country to zero the budget deficit and to start accumulating primary surpluses to pay the foreign debt alone.

Venizelos hastened to stress that governments are not engaged in the negotiations with the financial institutions and added: "We encourage the Greek banks to follow the Vienna proposal." They alone will decide whether they are inclined to alleviate the burden of the Greek foreign debt. The crisis with it will be completely controlled after the implementation of three major tasks connected with the Greek issue.

The immediate implementation of the privatization program is of utmost importance. It is expected to bring 50 billion euros by 2015, and the revenues from it would be used primarily for covering the foreign debt payments. Meanwhile, the extent of participation of the private owners holding Greek government bonds should become clear in the next few days. These two conditions will base the decision on what the second aid to Greece allocated by the International Monetary Fund, the European Central Bank and the European Commission will be.

After taking into account the privatization revenues and the rescheduling of part of the debt, Europe and the IMF will determine the final value of the second financial aid which will cover the need of borrowing in the period 2012-2014. At European level, the decisions on the future of Greece are expected to be taken at the extraordinary meeting of the euro zone finance ministers on July 3, this year. However, before the Europeans agree to another package of tens of billions of euros to Greece, the country should vote on and adopt the contested mid-term recovery program, which sew unrest lately and almost collapsed the Socialists in power.

The mid-term recovery plan was prepared by the former Minister of Finance George Papakonstantinou, who was transferred to the not so burdensome Ministry of Environment, Energy and Climate Change after the cabinet reshuffle last week. The program includes a series of fiscal measures and structural reforms to save the Greeks around 28 billion euros. Spending should be cut and revenues - increased in the next four years so that the government becomes able to function independently without the need for external borrowing. For the most part, the government rested on raising taxes rather than cutting the bloated budget spending which is the basis of high deficits. Papakonkstantinu was criticized seriously for this and some economic analysts argue that the high taxes and the low efficiency measures cost him his position of finance minister.

Unfortunately, Evangelos Venizelos did not meet people's expectations for change and announced additional measures that are also associated with burdensome taxation. First, the untaxable income is reduced from 12,000 euros to 8,000 euros. Taxpayers who receive between 8,000 and 12,000 euros will be subject to 10% tax. For other individuals the current legislation will apply. The extra tax on the annual income announced by Papakonstantinou during his last press conference remains and ranges between 1% and 5% depending on the declared income.
 
There will be a change for the freelancers and a license tax of up to 300 euros will be imposed after the person declares five years of service. The tax rate will depend on the sector in which the freelancer works as well as on its geographical position. The freelancers working in remote rural areas or islands will benefit from lower license tax, compared with their counterparts from central urban areas. Self-employed under the age of 30 years as well as 65-years-old entrepreneurs and disadvantaged people will be exempted from the license tax.

According to Minister Venizelos, about 55,000 self-employed declare income under 12,000 euros, which calls for the changes of the minimum non-taxable income and the introduction of new patent tax. He had declared against the reduction of non-taxable income some time ago, but now in the position of finance minister he admitted that the measure is inevitable. "It is not easy to negotiate with our partners (the Troika) under these conditions," admitted Evangelos Venizelos and does not exclude the introduction of new measures to reduce the deficit in the future.