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Greece sees austerity vote by end-June

(Agencies)
Updated: 2011-06-07 15:31

ATHENS - The Greek government expects parliament to vote on its medium-term austerity plan, a condition of a new international bailout, by the end of June, a senior government official said on Tuesday.

A second official poured cold water on any idea of a referendum on the austerity plan, and repeated government assurances that it would not seek early elections despite daily protests against yet more budget cuts.

The government also planned to cut corporate tax -- a demand of the conservative opposition -- and reduce value-added tax from 2012, the first official said, asking not be named.

However, these measures would not be part of the medium-term economic plan, he told reporters after a marathon cabinet meeting which began on Monday but carried on into Tuesday.

"Parliament will vote on the medium-term plan by the end of-June. It will be voted on as a single article," he told reporters.

Dissenters within the ruling PASOK party have demanded that each part of the plan, which includes 6.4 billion euros in new austerity steps this year and accelerated sales of state assets to cut the budget deficit, be handled in separate votes.

Voting on the plan as a single package would prevent the doubters from rejecting individual measures such as tax increases or sales of state assets.

The official signalled that the government had offered a concession to the opposition New Democary party, which has demanded a corporate tax cut to stimulate the economy in return for its support for the latest austerity drive.

"In September, there will be a new tax law lowering VAT and corporate tax rates from 2012. The law will be fiscally neutral," he said, without providing details.

The European Union has called on all leading Greek parties to forge a consensus on the medium plan, which covers a period beyond the next scheduled elections in 2013. Athens agreed on Friday with the EU and IMF on a new bailout to replace the original 110 billion euro rescue agreed a year ago.

Two senior government officials also said the government was not planning any referendum on austerity, even though Prime Minister George Papandreou said on Monday that he was open to studying legislation allowing such votes.

Greece already has such an article in the constitution, and it was not clear whether he was referring to this, or the possibility of amended or new legislation.

"The government is not considering holding a referendum or early elections," said the second official.