Greece's parliament has approved new tax legislation aimed at boosting state revenues by $3bn this year, under the bailout-dependent country's commitments to its international creditors.
The law was approved early on Saturday with the support of all partners in the country's three-party ruling coalition.
The law shuffles and simplifies tax scales, reforms family benefits, increases taxation of deposit interest, and expands the tax base to include groups such as low-earning farmers.
It brings in a new top tax rate of 42 percent for Greeks earning more than $56,000 a year. The previous top rate was 45 percent for incomes above $132,000.
Al Jazeera's John Psaropoulos, reporting from Athens, said the new law will hit employees and pensioners hard, as well as businessmen.
"What's really controversial here is the question how much you can squeeze the Greek people to pay out more?" Psaropoulos said.
Following months of negotiations with the EU and IMF on new spending cuts and reforms, last month Greece received $45.5bn in frozen loans, and is set to receive another $19.9bn in the coming months.
The tax law was one of the country's key commitments to secure the money, without which it would have been unable to pay its bills.
Finance Minister Yannis Stournaras told politicians just ahead of the bailout that they had no option but to pass the law.
Critics accused the government of heaping unbearable burdens on ordinary Greeks while giving the rich an easy ride, with the main opposition Radical Left Coalition saying austerity has "demolished the country's middle classes".
"I'm not a miser, I'm just honouring our promises to ensure we can continue receiving the [loans]," Stournaras said.
The latest tax measure will be implemented even as the government cuts $12bn from the government budget this year, he said.
In acknowledging the country's dilemma, Giorgos Mavraganis, the deputy finance minister, said: "We are not in favour of taxes.
"But in the current situation we must lead the country out of its impasse. Once we achieve stability we will proceed to cut taxes and simplify the system."
Greece has been kept solvent by huge rescue loans from its European Union partners and the International Monetary Fund (IMF) since May 2010, shortly after its finances imploded leaving the country unable to borrow from international markets.
In exchange for the two successive bailouts, Athens implemented harsh austerity measures aimed to reduce runaway budget deficits while bringing its debt mountain to manageable levels.
Source: Al Jazeera and agencies