February 10, 2010
Greece has one apparently simple option for reining in a budget deficit that has roiled financial markets: Clamp down on widespread tax evasion, which costs the country an estimated €15 billion ($20.5 billion) a year, an amount that would pay off a big chunk of the budget deficit.
The trouble is, tax evasion in this Mediterranean country is extremely difficult to eradicate.
Trying to cope with its budget problems, Greece announced new austerity measures Tuesday.
Finance Minister George Papaconstantinou said public-sector salaries would be frozen and supplemental incomes for civil servants cut by an average of 10%. Salaries and bonuses for the prime minister, senior government officials and officials at state-owned enterprises will be frozen, and under some conditions reduced. The measures would save some €850 million this year, said Mr. Papaconstantinou.
The government also announced a higher marginal tax rate of 38% on people earning more than €40,000 a year, up from about 25%.
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