The document outlines an economic plan proposed by New Democracy to address Greece's fiscal issues through austerity measures like tax reductions, spending cuts, and efforts to reduce tax evasion. It estimates the costs and benefits of the plan, showing it would reduce the deficit to 1% of GDP within 3 years, compared to a PASOK plan that would take 5 years. Institutional reforms are also proposed to promote growth, like streamlining legal processes for businesses.

1. THE LIMITS OF AUSTERITY
“The missed target was mainly the result of the deeper-than-anticipated
recession of the Greek economy...”
 “Economic growth has fallen short of forecasts, while the government
has faced problems cracking down on tax evasion...”
 “There are fears that more cuts could deepen the Greek recession...”
The Economist, “The limits of austerity”, Apr 26th 2011
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2.  REDUCTION ON TAX RATES
 Tax rate on corporate profits : 15%
 Taxation on dividends : 15%
 Highest income tax rate
 Initial stage: October 2009 level (falls from 45% to 40%)
 Second stage : in 3 years time it will not exceed 30%
 Tax free limit in line with current
 Less tax brackets
 VAT: 19% (upper category), 9% (middle category)
and 4.5% (low category)
 Tourist package : 4.5%
 Fuel Tax:
In 2 years time we remove the additional special tax that was imposed by Pasok
 Reduction on employer social insurance contribution by: 25%
 Tough sentences for undeclared employment
 Gradually phasing out of the so called taxes on behalf of third parties
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3.  Tax evasion increases
Tax evasion increased in 2010
despite the expectations of the government.
”The loss of revenues from the increase of VAT tax evasion was
approximately 1.1 billion euro and the loss of revenues from the
increase of income tax evasion exceeded a billion euro.
o “Annually the direct tax evasion and the loss of income from vat and
taxable income and property exceed 12 billions euro (5 billion from
VAT plus 7 billion euro from income tax and property.”
Alpha Bank, weekly economic bulletin , January 27
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4.  Principles against tax evasion
principles results
1st Reduction on tax rates Reduce motivation for tax evaders
2nd Simplified tax-system Reduce tax evasion limits
Implement strict penalties for
3rd Increase the cost of tax evasion
those who evade taxes
Contact restriction between
4th citizens Reduce tax evasion possibilities
And tax offices
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5. Revenues estimate from combating tax evasion
(billion euros) 2009 2010
Tax evasion 10 12
Paraeconomy 21 18
Total 31 30
Annual Impact from reduction of tax evasion / paraeconomy (per year) Overall
(billion euros)
Target 1st year 2nd year 3rd year 4th year Target
Tax evasion -10% 1.20 1.08 0.97 0.88 4.13
Paraeconomy -7% 1.26 1.17 1.09 1.01 4.53
Total 2.46 2.25 2.06 1.89 8.56
Impact from reduction of tax evasion /paraeconomy (per year) Overall
(billion euros)
1st year 2nd year 3rd year 4th year Target
Tax evasion 0.78 0.7 0.63 0.57 2.68
Paraeconomy 0.82 0.76 0.71 0.66 2.95
Total 1.6 1.46 1.34 1.23 5.63
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6.  Legalizing buildings, Revenue Estimates
Number of arbitrary buildings
1.000.000
Use of measure
70%
Arbitrary buildings towards legalisation
(conservative estimate) 700.000
Legalisation
Housing Number of arbitrary buildings Revenues
Scale Fees
Percentage towards legalisation (billion euros)
(euros)
Low 40% 10.000 280.000 2.8
Medium 35% 20.000 245.000 4.9
High 25% 25.000 175.000 4.4
Total 100% 700.000 12.1
Recovery Conservative
Year of Estimated revenues
recovery / Activation Measures estimate
(billion euros)
activation per year (billion euros)
1st year 15% 1.8 1.5
2nd year 45% 5.4 4.0
3rd year 40% 4.8 3.0
Total 100% 12.1 8.5
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7.  Revitalizing the Economy
 Residential mortgage interest subsidy
by two percentage points
 Program for the improvement of buildings
energy efficiency
 Utilization of NRSF
 More resources to the Public Investments
Program
 Establishment of permanent vacation homes
programs
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8.  Offset measures - «breathes»
Offset 1st year (in billion euros)
1,5 1,2 Subsidy of housing loans
Energy efficiency
0,2 NRSF
1,4 PIP
Other offset
0,8
Offset 2nd year (in billion euros)
0,2 0,1
1,4
3,4
Other offset measures (indicative): PPP 0,0
projects, additional measures for housing
construction, concession agreements,self-
financed projects, “fiber optics at home”,
business parks.
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9. Cost / Benefit Analysis of “Restart”
Cost (bil. euros) Benefit (bil. euros)
From Tax reduction
Companies 0.75 Legalization of arbitrary buildings 1.50
Individuals 0.40 Tax evasion reduction 1.10
VAT 1.90 Revenues from liquidity 1.60
Fuels 1.00 Revenues from internal debt reduction 1.50
Insurance contributions 1.40 Housing loans subsidy 1.20
5.45 Housing Energy efficiency 0.20
NRSF 1.35
From increased spending PIP 0.80
PIP 1.00 Other offsets 1.50
Low pensioners 1.50 10.75
Families with many children 0.15
2.65 Recovery 1.90
Total 8.10 Total 12.65
Net Benefit 4.55
Note: Net benefit of economy restart policy for the
first year, beyond results of current policy
(Memorandum)
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10. Revenue Enhancements & Cost Reduction
Plan ND Plan (per annum)
(in billion euros)
Government ND 1ο 2ο 3ο 4ο
Salary Cost reduction 2.0 2.0 0.6 0.5 0.5 0.4
Operation Cost Reduction 2.5 2.0 0.6 0.5 0.5 0.4
Reduce Government Agencies 1.1 1.1 0.5 0.3 0.2 0.1
Restructure Gov-owned Companies 2.3 1.5 0.3 0.6 0.4 0.2
Reduce Defence Spending 1.2 0.5 0.1 0.1 0.2 0.1
Hospital Cost reductions 1.2 1.2 0.3 0.3 0.3 0.3
Medical Bill reduction 1.5 1.5 0.4 0.4 0.4 0.3
Pension fund and social cost reduction 2.5 0.5 0.1 0.1 0.1 0.2
Improve tax collection 3.5 4.5 0.5 1.5 1.5 1.0
Reduce tax reduction 2.0 0.3 0.0 0.2 0.1 0.0
Improve pension fund collections 3.5 2.0 0.3 0.5 0.6 0.6
Increase Local Gov Recenues 0.6 0.3 0.0 0.1 0.1 0.1
Other costs 2.0 1.0 0.5 0.3 0.2 0.0
Total 2.9 18.4 4.2 5.4 5.1 3.7
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11.  Comparative Analysis
Program ND (in bil. euros)
Measures (2010 + 2011) 37.0
Cost -8.1
Cuts/ Revenue boost 18.4
Total 47.3
Deficit reduction to 1% of GDP in 3 years
Program PASOK (in bil. euros)
Measures (2010 + 2011) 37.0
New measures 2011 3.0
Measures 2012-2015 23.0
Total 63.0
Deficit reduction to 4,9% of GDP in 3 years
Deficit reduction to 1% of GDP in 5 years
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12.  Institutional Measures
 Offset mechanism for all debt of private individuals and
corporates from and to the State
 Obligation of the state to electronically deliver documents
required
 Expanding “Fast track” to all businesses
 Legal fast track
 Resolution of the court cases in one year at the most
 Zero basis budget
 Abolish extraordinary business contributions
 Decisive strike to illegal trade
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13.  Change to the Development Model
 Tax system
 Emphasis on exports
 Shipping/Tourism
 Agriculture /livestock-breeding/ Fishing
 Manufacturing / standardization
 Proclamation of Exclusive Economic Zone (EEZ)
 Mineral wealth
 Research / Technology / Innovation
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