ATHENS, Jan. 11 (Xinhua) -- The Greek parliament was set to vote on Friday night on a tax bill promoted by the government as one of the prior actions requested by international lenders for the release of further bailout funds to Athens this year.
The so-called "mini" tax bill aims to raise revenues of some 2 billion euros (2.6 billion U.S. dollars) in 2013-2014 through extra taxes, to simplify the taxation system and tackle tax evasion. But it adds burden on Greek citizens and may lead to deeper recession.
During the debate ahead of the crucial vote, Greek Finance Minister Yannis Stournaras acknowledged that the measures were difficult.
However, he argued that there were no alternative realistic solutions to Greece's current woes and that the burden would ease once the country returns to growth next year.
"For each euro collected from the extra taxes, we save one euro from wages, pensions and social benefits," he said.
He underlined the necessity that all Greeks would pay their share of taxes, as large-scale tax evasion, which is estimated to cost the country about 15 percent of GDP annually, was seen as a key cause behind the debt crisis that had plagued Greece since late 2009.
Under the new bill, which local analysts say is the 11th tabled in parliament in three years, the tax scales are reduced from eight to three.
The bill foresees a top rate of 42 percent for those who have annual incomes of more than 42,000 euros. Those earning up to 25,000 euros are taxed at 22 percent and up to 42,000 euros at 32 percent.
So far, incomes have been taxed on rates starting from 18 percent and reaching 40 percent for earners of over 60,000 euros per year and 45 percent for incomes of above 100,000 euros.
For free-lance professionals, the rate is set at 26 percent for those earning up to 50,000 euros and 33 percent for those above this threshold, while for businesses, the rate is reduced to 32 percent down from 40 percent.
Taxes on interest from deposits would also increase from the current 10 percent to 15 percent, while a string of tax exemptions and deductions for farmers and other groups of taxpayers are abolished.
Low- and middle-class pensioners and employees, as well as small- and medium-sized entrepreneurs have complained that they could not bear more burden and local analysts warned that the plan to raise more revenues from taxes could backfire.
Even the two smaller center-left parties which support the conservative coalition government have requested that last minute amendments.
Despite reservations expressed by Democratic Left and socialist PASOK party deputies, political analysts in Athens expected that the bill would easily pass the assembly, as the coalition currently holds a 163-seat majority in the 300-member chamber.
The ratification of the "mini" tax bill is part of a series of terms Athens has undertaken to ensure the disbursement in coming weeks of the next 9-billion-euro bailout tranche from the European Union and the International Monetary Fund who have kept Greece afloat since 2010.
The government intends to push through a second comprehensive tax bill in the spring to overhaul the taxation system.
Critics of the government economic policy noted that successive rounds of austerity measures, wage cuts and tax hikes over the past two years to slash deficits had plunged Greece into heavy recession of 6.6 percent in 2012 with record high unemployment rates.
According to the latest data from the country's Statistical Authority this week, unemployment hit a new high of 26.8 percent last October, up from 26.2 percent in September 2012 and 19.7 percent of October 2011.
Pointing to official data released Thursday from the Finance Ministry which showed that the budget deficit in 2012 declined by 30 percent in a year to 15.9 billion euros from 22.8 billion euros in 2011, beating the 16.3 billion euros target set, critics of the tax bill asked the government to ease the pressure on taxpayers.
Government officials on the other hand argued that the plan to exit the crisis could go off track if Greece loses the current momentum.
If Greeks stick to the program, the economy is expected to return to growth at the end of 2013 or the beginning of 2014, Greek Foundation for Economic and Industrial Research reiterated.