ATHENS, Jan. 12 (Xinhua) -- Greek parliament approved on early Saturday a new tax bill to ensure the disbursement of the next tranche of international rescue loans aiming to lift the debt-laden country onto the path of recovery.
The so-called "mini" tax bill which is part of a wider tax system overhaul scheduled to continue in spring, passed with the backing of the 163 deputies of the three-party coalition government at the end of a marathon session which was broadcast live on the parliament's television channel.
During the roll call vote the bill's articles were ratified by a wide majority with 288 MPs present in the 300-member chamber.
The new law aims to boost revenues by approximately two billion euros (2.65 billion U.S. dollars) over the next two years through extra taxes, to simplify the taxation system and address wide-spread tax evasion, which is seen as a fundamental factor behind the debt crisis which erupted three years ago.
Its ratification was one of the key prerequisites set by European Union and International Monetary Fund creditors before the release of the next 9 billion euro bailout installment in coming weeks under agreements to keep Greece afloat and support its return to growth, Greek Finance Minister Yannis Stournaras stressed in his speech.
During a heated debate ahead of the midnight vote government ministers argued that the bill might be painful, as other austerity measures imposed since 2010 to avert default, but it is absolutely necessary and the only realistic plan at the moment to meet deficit- reduction and growth-boosting goals to exit the crisis.
They promised that the pressure will ease once Greece leaves far behind the risk of financial meltdown and recovers. According to the updated official projections, the first positive signs of growth are expected at the end of this year and early 2014.
Opposition party lawmakers rejected the bill, warning that it will fuel recession in a country which has lost a quarter of its GDP over the past five years, as taxpayers' limits, in particular among the middle class, have been overstretched.
The new law reduces the current eight tax categories to three, introducing a 42 percent top rate on incomes above 42,000 euros for wage earners. Annual incomes up to 25,000 euros will be taxed at 22 percent and up to 42,000 euros at 32 percent.
Under the previous law, incomes were taxed on rates starting from 18 percent and reaching 40 percent for earners of more than 60,000 euros per year and 45 percent for incomes of above 100,000 euros.
For self-employed professionals the rate is set at 26 percent for incomes up to 50,000 euros and 33 percent for above this threshold, while for businesses the rate is reduced to 32 percent down from 40.
Critics of the new policy said that emphasis should be shifted from placing further tax hikes on law-abiding recession-hit taxpayers and therefore hammering the economy and further eroding living standards to cracking down hard on tax wealthy tax dodgers.
According to estimates tax evasion costs Greece 15 percent of GDP per year. As the country has been rocked in recent months by the arrests of prominent businessmen for tax dodging and the revelation of a list of 2,000 major depositors in a Swiss bank which could contain large-scale tax cheating, Finance Ministry officials presented during Friday's debate some results on the ongoing efforts to face the issues.
During 2012 approximately 700 persons owning the state a total of almost 1.5 billion euros in taxes have been arrested. (1 euro= 1.32 U.S. dollars)