UPDATE 4-Greek PM offers some tax relief, no handouts

* Prime minister offers little to austerity-hit Greeks

* Some tax relief to companies struggling with recession

* Police fire tear gas in clashes with hundreds of youths

* Thousands march peacefully against belt-tightening

(Adds fresh Papandreou comments, background)

By Harry Papachristou

THESSALONIKI, Greece, Sept 11 (BestGrowthStock) – Prime Minister
George Papandreou offered no handouts to austerity-weary Greeks
but gave some relief to companies struggling with recession in a
main speech on the economy on Saturday.

Bound by the conditions of a 110-billion-euro ($140 billion)
EU/IMF bailout deal to rescue Greece from bankruptcy, his
Socialist government has imposed tax rises and draconian salary
and pension cuts to fight deficits, prompting strikes and

“We are fighting for the survival of Greece,” Papandreou
said in his annual economic policy speech at a trade fair in the
northern city of Thessaloniki. “Either we’ll win together, or
we’ll sink together.”

About 20,000 people marched through the city to protest
against belt-tightening measures. A few hundred youths tried to
break through police lines cordoning off the venue and were
pushed back with tear gas in clashes that lasted a few minutes.

Papandreou said his government will continue pushing reforms
and opening up sectors of the economy such as electricity and
freight transport and also overhaul loss-making state firms
including Hellenic Railways (OSE).

“I ask all the country’s productive forces to join us, to
support this great change,” he said.

Bowing to calls from the business world buckling under a
deepening recession, he said he would speed up relief for
corporations by bringing forward planned cuts in retained
earnings tax to 20 from 24 percent in 2011 instead of 2014.


But he avoided concrete pledges to a restive public that has
taken to the streets in sometimes violent protests this year,
reluctant to displease international lenders or risk the next
instalment of the loan due in the last quarter.

“We are still at the start of our effort. I don’t want to
make big promises but I understand the difficulties poor
pensioners face,” he said. “I will ask the finance minister to
do his best depending on how revenues go.”

Despite the harsh measures, opinion polls show his Socialist
party ahead of the conservative opposition. A poll by Kappa
Research for To Vima on Sunday, showed the Socialists would win
29.1 percent of the vote versus 21.3 percent for the
conservatives if elections were held now.

Last October, Papandreou capitalised on a wave of anger at
scandals to trounce his conservative rival, Costas Karamanlis,
who broke the tradition of making generous promises at the
Thessaloniki fair and told Greeks he would freeze public sector
salaries, eventually losing the election.

But huge deficits inherited from the conservatives plunged
Greece into a debt crisis that shook the euro zone and
international lenders stepped in to rescue the country in
exchange for tough fiscal measures.

Consumption has been hit as public sector wages were cut by
15 percent, pensions by 10 percent and value added tax increased
by 4 percentage points to 23 percent. The economy is set to
contract by 4 percent this year and unemployment hit 11.6
percent in July from 8.6 the year before.

Declining consumption is hurting state revenues and
threatening targets to cut the deficit to 8.1 of GDP this year
from 13.6 percent in 2009.

“The market is pretty worried about whether the government
will find the golden medium to kick start the economy and secure
the revenues that are missing,” an Athens-based analyst said.
“Only if they manage to find this golden medium, will the
country be able to get out of this tunnel.”

(Additional reporting by George Georgiopoulos; Writing by
Dina Kyriakidou; Editing by Michael Roddy)

UPDATE 4-Greek PM offers some tax relief, no handouts