Greece rules every transaction above 1,500 euros will not be considered legal if it is done in cash -

Reading - Greece rules every transaction above 1,500 euros will not be considered legal if it is done in cash -

Greece outlined on Tuesday its public sector incomes policy and a tax reform bill, as part of an EU-endorsed plan to increase state revenues and reduce its huge deficit.

The following are comments by Greek Finance Minister George Papaconstantinou at a press conference:

IMPACT OF REFORMS

"The total benefit of our incomes policy will be around 800 million euros.

EU

"EU partners and markets will closely monitor the implementation of our fiscal plan, I believe that the response will be positive. The measures that we have announced are becoming action"

TIME FOR CHANGE

"The time has come for major changes, the country can't afford to wait any longer"

TAXATION

"From 1. Jan. 2011, every transaction above 1,500 euros between natural persons and businesses, or between businesses, will not be considered legal if it is done in cash. Transactions will have to be done through debit or credit cards"

"With the new tax scale, there is a shift of the burden from low and middle income to high incomes.

"There's tax relief for incomes up to 40,000 (euros)"

"Taxable income based on the new scales will include capital gains from the short-term trading of stocks"

REFORMS

"The income policy frame and the tax reform are part of the government's wider effort to clean up fiscal finances ... and open new roads for growth. We all know the difficult situation the country is in, we all know the government has submitted to the European Commission a stability and growth plan.

"We all know that the public sector wage policy is full of injustices ... which have been formed by adding up various allowances without a central direction.

"Everyone needs to contribute clearly to the big effort to save our economy. It is necessary to contain the cost of wages and (have) a just distribution of the burden between workers."

TAXATION

"Every autonomous taxation ... for special professions, like engineers, architects, taxis, gas station owners and kiosks is abolished"

BANK DEPOSITS

"Deposits in banks outside Greece are exempted from audits of their origin if they are repatriated within six months of the passing of the tax bill and are taxed with a 5 percent rate"

PUBLIC PENSIONS

"Public sector pensions will increase by 1.5 percent, except those above 2,000 euros a month"

PUBLIC SECTOR WAGE CUTS

"We need to contain the public wage bill and fairly share out the burden".

"The wage cuts will begin from 18 euros a month, reaching 345 euros a month for court officials. In percentages, it will be between 1 and 5.5 percent"

"The impact on low-income earners will be mitigated by lower taxes on middle and low incomes"

"The public sector wage income bill increased by 88 percent since 2001, far above the GDP increase"

REFORMS

"Income policy and the tax changes are in the framework of cleaning up public finances.

SPENDING CUTS

"There will be no wage increase for the prime minister and ministers and their allowances will be cut by 10 percent."

"Wages of board members in unlisted state companies will fall by 50 percent"

"The budget bill for allowances and compensations will be cut by 10 percent"

Read more -http://www.reuters.com/article/idUSLDE61824V20100209

EU Wants Greece to Explain Debt Swaps - used complex financial deals that made its debt limits look lower -

Reading - EU Wants Greece to Explain Debt Swaps - used complex financial deals that made its debt limits look lower -

The European Commission said Monday that it wants Greece to explain how it used complex financial deals that allegedly made its debt limits look lower. Greece's credibility is already under fire for falsifying statistics and hiding the extent of its deficits, which have triggered a debt crisis that threatens the euro currency union and has sent the euro sliding.

EU spokesman Amadeu Altafaj Tardio says the EU executive has given Greece an end-of-February deadline to give details on how the deals, called currency swaps, affected government accounts since 2001.

He said such swaps weren't illegal unless the Greece was not using market rates to calculate the exchange rates used for the swaps. Greece never told the EU that it was using the swaps to mask debt, he said.

Eurozone nations pledged last week to aid Greece "if needed to guard financial stability in the euro area" — but did not say how they would bail out the country if it risks defaulting on its debt payments.

European stock markets and the euro were trading higher Monday despite disappointment last week that euro leaders did not lay out a solid plan to shore up Greece's finances. Bond markets see less chance of a default, as indicated by interest-rate spreads narrowing between Greek bonds and benchmark German ones.

Finance ministers from the 16 nations that use the euro meet later Monday to discuss whether they think Greece's austerity program will be enough to reduce its massive deficit over the next three years. Ministers from all 27 EU countries then meet Tuesday.

The European Commission has already warned that it will ask Greece to do more if it can't implement promised spending cuts and tax hikes — which have already sparked protests and a sweeping public sector strike in Greece.

It wants to keep Greece on a tight rein, ordering the government to report back in mid-March to show what kind of cuts it has made. The EU could then demand tougher action. The Greek government has promised to do everything necessary to reduce its deficit from 12.7 percent of gross domestic product last year to 8.7 percent this year — and under a 3 percent limit set by EU rules by the end of 2012.

The EU's former economy commissioner, Joaquin Almunia, told reporters in Paris on Monday that "a clear set of commitments" were "needed for Greece and the good functioning of the euro area."

Read more -http://www.cnbc.com/id/35404500