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Greek tax, customs workers and taxis on strike

By Nicholas Paphitis

Associated Press

Published: Monday, Sept. 12 2011 1:35 p.m. MDT

A pedestrian walks past a woman begging in the street with her young child in front of a closed shop, in the northern Greek city of Thessaloniki, on Monday, Sept. 12, 2011. Recession-plagued Greeks have been slapped with an emergency property tax, to be included in their electricity bills, in an effort to plug a revenue gap spotted by international rescue creditors. Graffiti at the windows read : "Class hatred" "university occupations everywhere"

Dimitri Messinis, Associated Press

ATHENS, Greece — Union opposition to the Greek government's austerity program intensified Monday as tax collectors went on strike, and power workers vowed to sabotage a new emergency property tax aimed at plugging a budget gap spotted by international creditors.

Tax and customs workers walked off the job for two days to protest cuts in their bonus pay while the power company union said it would "not allow the company to be used as a tax-collecting mechanism" for the property levy, which will be included on household electricity bills and is expected, together with fresh public sector cuts, to reap €2 billion ($2.7 billion) this year.

The government, which said it chose that system of payment because of inefficiencies within the tax authorities, called the union threat "unacceptable."

The latest bout of labor unrest came as the European Commission said Greece's budget deficit this year will be more than expected. It said the country's deficit as a percentage of national income would likely reach 9.5 percent, up from the originally predicted 7.6 percent.

Uncertainty over the prospects facing weaker euro-member countries hit European stock exchanges, with the Athens bourse suffering another bad session, closing 4.43 percent lower at 847.48.

Greek borrowing costs again shot up to nearly 23 percent, for 10-year bonds, and a record rate gap, or spread, with the German equivalent of more than 21 percent.

The data provided another reminder of the scale of the problems the government is dealing with.

In the first eight months of the year, the country's budget deficit was €18.1 billion ($24.7 billion), already exceeding the annual target of €17.1 billion ($23.3 billion). The ministry attributed the bulk of the shortfall to the deeper than expected recession this year — the Greek economy is expected to contract a further 5.3 percent — but said that the public finances will get better in the next four months as new tax hikes and spending cuts come into effect.

Debt-crippled Greece is being kept solvent by a €110 billion ($150 billion) international rescue loan package, while an agreement in July to double the bailout size has yet to be implemented. The cash lifeline, without which the country would go broke in a few weeks, is conditional on Athens meeting its ambitious savings targets.

European Union President Herman Van Rompuy drove that point home on Monday, while praising the new property tax as a "positive" measure.

"As far as Greece is concerned, they have to implement the program on which there was an agreement," he said. "If there is a slippage, they have to correct it as soon as possible, in a credible way."

Van Rompuy said he looked forward to the outcome of talks between the Greek government and representatives of the country's creditors, who are expected in Athens in coming days to conclude a monitoring mission that was suspended on Sept. 2.

Late Monday, Finance Minister Evangelos Venizelos had a "lengthy telephone conversation concerning the developments in Greece, the eurozone and EU," with his German counterpart Wolfgang Schaeuble, a Finance Ministry statement said. It said the two ministers would continue the conversation Tuesday.

Prime Minister George Papandreou insisted Monday that the cutbacks would work.

"We are honoring our part of the agreement," he told his Socialist party's lawmakers. "We have achieved a spectacular reduction of the deficit, although that remains at a high level. ... We must prove that, whatever the difficulties and efforts required, Greece will make it — no matter how high the bar is raised."

Greek taxi owners, who object to the abolition of protective licensing restrictions, also launched a 48-hour strike Monday. In July, cabbies walked off the job for nearly three weeks, blockading airports and harbors at the height of the tourist season.

Associated Press writer Raf Casert in Brussels contributed to this report.

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