Greece’s ability to pay more tax in debt crisis plans ‘exhausted’

Theodoros Pangalos spoke as the debt-shackled nation faced fresh strikes and braced itself for another inspection today by international creditors to decide whether to continue vital loan payouts.

On Tuesday, the Greek parliament approved a new emergency property tax to be added to electricity bills later this year, supported by German chancellor Angela Merkel who pledged to offer the struggling country “all necessary assistance”.

But before the meeting between the two leaders, Ms Merkel’s government down-played speculation of bold new moves to tackle Europe’s sprawling sovereign debt crisis.

German finance minister Wolfgang Schaeuble ruled out increasing the eurozone’s new 440bn euro (£382bn) rescue fund, calling it “a silly idea” that could ultimately endanger the AAA ratings of the main creditor countries such as Germany and the Netherlands.

Greece remains under strong pressure to abide by its painful deficit-cutting targets and it will go bankrupt by mid-October if it does not get an expected 8bn euros (£7bn) loan.

“I believe that the tax limits of Greek society have been exhausted. I would say they have been exhausted for some time,” Mr Pangalos told private Mega TV yesterday .

Mr Pangalos, a 73-year-old Sorbonne-trained economist, is listed as owner or part-owner of eight properties and farmland in greater Athens and several other parts of Greece.

“The property I own was purely obtained through inheritance. Personally, I have never bought anything... I will be obliged to sell some of these properties. There is nothing else I can do,” he said.

Greeks have been outraged by the announcement of new austerity measures, including pension cuts and the new property tax, coming after more than a year of spending cuts and tax increases.

In Athens, another 24-hour public transport strike yesterday left commuters struggling to reach work, as unions lashed out against the austerity measures that the Socialist government hopes will give it access to crucial loans. Customs and tax office workers were also on strike, while about 350 retirees demonstrated outside the Finance Ministry against the latest pension cuts and tax increases.

The heads of Greece’s international debt inspectors are due back in Athens today to complete a review of the government’s cost-cutting programme.

International creditors have urged Greece’s Socialist government to make deeper cuts in public payroll costs instead of repeatedly raising taxes.

On Tuesday night, more than 1,000 protesters from a Communist-backed labour union demonstrated outside the Finance Ministry, urging Greeks not to pay emergency property tax bills being sent to households.

Protesters burned copies of the tax notices during the peaceful rally.

Responding to the ongoing crisis Foreign Secretary William Hague yesterday branded the eurozone a “burning building with no exits” amid frantic efforts to control the sovereign debt crisis.

Mr Hague said he believed Germans would have to subsidise weaker members such as Greece for “the rest of their lifetimes”.

The intervention emerged as the president of the European Commission, Jose Manuel Barroso, warned that the EU faced its “greatest challenge”.

However, Mr Barroso insisted Greece would remain in the eurozone despite fears that it will default on huge debts.