By George Georgiopoulos
ATHENS (Reuters) - Greek Prime Minister George Papandreou will discuss new emergency measures with his cabinet on Monday to cut the deficit, keen to convince lenders Athens can deal with a debt crisis without a restructuring.
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At stake is a 12-billion euro aid tranche under the EU/IMF bailout agreed last year, as well as additional help needed as the country is not expected to return to bond markets in 2012.
As part of new austerity measures, Athens is mulling for the first time the taboo issue of dismissing full-time civil servants. Also considered are deeper cuts in public sector wages and further consumer tax increases.
Newspapers said on Monday measures the cabinet will examine include halving a current 12,000-euro income tax exemption, and cuts in other exemptions on medical expenses and interest on home loans, moves certain to squeeze take-home pay for millions of workers and pensioners.
Papandreou has vowed to speed up reforms and do everything it takes to avoid default, setting the stage for the announcement of a tough set of measures.
"We are in the middle of an ongoing battle. We will not surrender. We will do whatever it takes to make sure Greece stands on its own feet," he told a gathering in the southern town of Nafplio last week.
The mid-term fiscal and privatization plan is part of an ongoing EU/IMF inspection visit, described by Greek officials as the toughest review to date of Athens' progress in implementing policies under its 110 billion euro bailout.
The cabinet will have an initial discussion on the plan on Monday. Papandreou will then consult with opposition party leaders on Tuesday. Further talks with EU/IMF inspectors are scheduled later in the week.
EU leaders are growing impatient with Greece's fiscal slippages and expect to get convincing answers in the new four-year plan which aims to wipe out the budget deficit and raise 50 billion euros ($70.78 billion) from privatizations.
Other new fiscal steps may include slapping a one-off levy on high incomes, possibly on those earning more than 80,000 euros annually, and a tax on large real estate holdings.
The government is also considering a uniform value added tax (VAT) rate of 18 or 19 percent for all goods and services versus a current regime that ranges from 13 to 23 percent.
If adopted, the move will mean higher costs for foods, electricity bills and transport but some relief for other consumer goods such as cars, furniture, appliances and apparel as retailers are hard-hit by the three-year recession.
The government is steadily losing public support in the face of harsh austerity. An opinion poll on Saturday showed 80 percent of Greeks won't accept more measures and the ruling Socialists tied with the opposition for the first time since their October 2009 election victory.
"An explosive situation is building, people feel that the going is getting very tough," Dimitris Mavros, managing director of pollster MRB, which conducted the survey, told Reuters.
However, any failure to speed up reforms will fuel speculation that Greece will have to restructure its debt to pull itself out of its fiscal mess.
The chairman of the 17-country Eurogroup Jean-Claude Juncker said on Saturday Greece has fallen behind targets and should set up a trustee institution for privatizations.
Greece and European Central Bank officials have ruled out any kind of restructuring but Juncker said last week for the first time that Greece may have to move toward a "soft restructuring" of its debt.
On Friday, Fitch became the second major ratings agency to warn that it would consider any kind of debt restructuring as a sovereign default.
(Editing by Stephen Nisbet)