Athens (Reuters) - Greece seems to have accepted tax relief with its international donors, aimed at achieving a broad consensus for more austerity avoid a debt default value, but the opposition said on Tuesday, it would still not gain his support.
International donors require big Greek political parties subscribe to the latest austerity and drive for reform to ensure that the canned Greece to tackle its huge budget deficit for years to come, one that is the power of the Government.
In Berlin, a German coalition source said inspectors from the European Union, the ECB and IMF had a contract with the Socialist Government on a reduction of value added tax.
"They have agreed on it," the source said, after Athens newspaper reports that the "troika" team, which is scrutinizing Greek finances, was supported by a reduction in VAT rates.
The Germany is a major contributor to bail was that public opinion is hostile to provide additional funding of rescue for the Greek economy.
Greece Antonis Samaras conservative opposition leader demanded that tax cuts, including a package of 15 percent for corporate tax, as the price of an agreement with the Government, the EU has insisted on a condition for more funds.
An official at his new democracy party said that he wanted more than a reduction in VAT. "If good, this is a good step, but not quite good enough to boost the economy,"the official said."".
"Tax on corporations and reductions in income tax of individuals that we suggested have more impact, less expensive and no immediate impact of cash flow," said the official.
The agreement of VAT has not been officially confirmed and the timing of any Cup remains uncertain.
"As the negotiations are not yet complete, it would be inappropriate to reveal everything I know", said Government spokesman George Petalotis. "" "". "We should not create expectations that cannot be met."
Financial daily Imerisia reported that Athens had the green light from the troika to lower the higher rate of VAT to 20 per cent of the 23 for the opposition to agree on additional measures to reduce the budget deficit.
The rate applied to items such as food would fall 10 percent from 13 percent, he said in a report for clarification.
COMPLETE THE MISSION
The troika should fulfill its mission of Athens, the end of the week and then produce its review of the Government's progress in the achievement of its objectives for deficit.
His report will determine if Athens gets the next tranche of EUR 12 billion in June under a 110 billion euros ($158 billion) rescue plan Greece took the Union European and Monetary Fund International a year ago.
Papandreou party PASOK holds a comfortable parliamentary majority. But the work is underway on how to tackle a hole of funding until 2013, when the next parliamentary elections are due.
Politicians in the Portugal, another beneficiary of rescue, have already agreed to similar conditions of consensus.
The Greece dropped its deficit reduction targets, mobilize funds from the IMF/EU more risk will not come and that it might default on its 327 billion euros of debt, equivalent to approximately 150% of annual production.
A way to reduce debt is to the privatization of State assets. But Fitch, who cut the rating of the Greece by three notches last week, throwing doubt on how much can be achieved.
"The magnitude of the challenge before the Greek authorities, including a new commitment to privatize the 50 billion euros by 2015 State assets and their ability to deliver to the increase of political risk and implementation is increasingly in doubt,", said principal Paul Rawkins Director.
Austerity is hitting hard Greek households. Retail volume sales plunged 17.5% year on year in March after a drop of 10.6% in February, data showed on Tuesday.
During this time, about 50,000 people gathered in the Centre of Athens, a seventh consecutive day of protests anti-austerity. Bang pots, demonstrators held a banner reading of the Parliament: "We did shall away until the Government, the troika and the debt leave."
"We are under a regime of economic bondage," the Dean of Athens University Theodosis Pelegrinis told the crowd. Demonstrators also found also in the second city of the Greece Thessaloniki.
(Other reports by Renee Maltezou, Ingrid Melander and Harry Papachristou Athens, and Matthias Sobolewski Berlin, written by David Stamp;) (Editing by Diane Craft)
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