Tuesday, June 23, 2015

Tsipras' Other Problem: Holding Together His Coalition at Home

by Theophilos Argitis & Marcus Bensasson


June 23, 2015

Greek Prime Minister Alexis Tsipras turned Tuesday to shoring up support at home for his plan to end a five-month standoff with creditors that has brought his nation to the edge of default.

Tsipras needs to ensure his coalition, ranging from Maoists to Social Democrats, will back proposals he outlined Monday that include eliminating early retirement options, raising the sales tax, increasing taxes on middle- and high-income earners and introducing a new levy for companies with annual profit of more than 500,000 euros ($568,000).

“Very large problems remain for a solution,” said Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics in Washington. “The Greek government -- somewhat surprising for a self-professed reform and anti-austerity government -- seems to have merely agreed to impose a lot more austerity through higher taxes, but offers relatively little commitment to genuine economic reform.”

Tsipras is seeking to assuage the left flank of his party - - some of whom want Greece to default on its debt altogether -- by focusing on tax increases for companies and high-income individuals instead of spending cuts. The Left Platform, which holds about 40 seats in parliament and is composed of former communists and others closely aligned with labor unions, could defeat the government if its members vote against the plan.


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