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The Greek parliament has approved a series of unpopular tax rises aimed at boosting revenue in line with Athens’ commitments to international creditors.

The measures, approved overnight, introduce a new top tax rate of 42% for Greeks earning more than 42,000 euros ($56,000) a year.

Corporate rates also go up and the tax base now includes low-earning farmers.

Greece has been kept solvent by huge rescue loans from its EU partners and the IMF since May 2010.


The Conservative-led government insists the new measures, designed to raise up to 2.3 billion euros this year, are fair.

“We are not in favor of taxes,” Deputy Finance Minister Giorgos Mavraganis said.

“But in the current situation we must lead the country out of its impasse.”

The Greek parliament has approved a series of unpopular tax rises aimed at boosting revenue in line with Athens' commitments to international creditors

The Greek parliament has approved a series of unpopular tax rises aimed at boosting revenue in line with Athens’ commitments to international creditors

The changes are part of an overall package approved in November to allow Greece to qualify for further bailout funds.

But the opposition says the tax rises will increase hardship for ordinary Greeks. The main opposition Radical Left Coalition says austerity has “demolished the country’s middle classes”.

Deep spending cuts and job losses have triggered street unrest across Greece in recent years.

France’s Prime Minister Jean-Marc Ayrault has said that 9 out of 10 citizens will not see their income taxes rise in the new budget.

He has confirmed that there is to be a new 75% tax rate for people earning more than 1 million euros ($1.3 million) a year.

Jean-Marc Ayrault has not yet detailed how much taxes will rise for the rest of the top 10%.

It is one of the key policies in what he called “a courageous, responsible budget – a budget of conquest”.

France’s Prime Minister Jean-Marc Ayrault has said that 9 out of 10 citizens will not see their income taxes rise in the new budget

France’s Prime Minister Jean-Marc Ayrault has said that 9 out of 10 citizens will not see their income taxes rise in the new budget

The government’s priorities were young people, training and cutting 10 billion euros from its spending, he said. This would demand an effort but would be fair, he added.

Official figures on Friday showed that French public debt had hit 91% of GDP between April and June this year.

It was 89.3% at the end of March, which was still well above the eurozone limit of 60%.

Jean-Marc Ayrault pointed out that debt had grown by 30% of GDP in the past five years and that the debt threatened future generations.

He also said that the budget would encourage small and medium businesses and that taking risks would also be encouraged.

In its first budget, the Socialist government repeated its promise to cut the annual deficit to the eurozone limit of 3% of GDP next year.

The deficit this year is expected to be 83.6 billion euros, which is 4.5% of GDP.

Jean-Marc Ayrault said that France was strong when it set itself ambitious targets.

But some analysts said that the targets were too ambitious because they assumed too much growth for the coming years.

They said that tax increases and spending cuts would make it difficult to achieve the 0.8% growth in 2013 and 2.0% growth in 2014 that are predicted by the budget.