Budget targets are set

Gov’t aims to lower deficit with strong growth, tight fiscal policy

The 2008 budget, unveiled by the government yesterday, aims at cutting the deficit by almost one percentage point to 1.7 percent of gross domestic product (GDP), with the help of a robust economy and a tight fiscal policy.

Economy and Finance Minister Giorgos Alogoskoufis said the government's financial plan for next year envisages a reform of the tax system that includes reducing the number of charges applicable on property and catching tax cheats in the fuel sector.

There will be no increase in the VAT rate, said the minister even though the conservatives declined to rule out the option of a VAT hike during their election campaign.

Ordinary revenues are seen rising by 11.3 percent versus annual growth of 6.2 percent in spending.

It is hoped that the extra income will help trim the deficit to 1.7 percent of GDP from 2.5 percent this year.

The government hopes to present a balanced budget by 2010.

Greece's economic growth expected to remain among the highest in the eurozone for another year.

The Finance Ministry sees GDP expanding by 4 percent year-on-year versus an expected 3.9 percent for 2007.

Alogoskoufis presented the budget to the press yesterday shortly after handing in a draft copy to Parliament.

The Labor, Agricultural Development and Macedonia-Thrace ministries are seen among the «winners» with their revenues rising by more than 10 percent next year.

The lowest increases were handed to the Environment and Tourism ministries.

PASOK leader George Papandreou said promises made by Prime Minister Costas Karamanlis during the election campaign have been supplanted by the harsh reality of the budget.

Taxpayers are being called to pay new taxes on fuel and properties and further indirect taxes that are unjust, added Papandreou.

The government plans to collect 57.92 billion euros from taxpayers next year, almost 6 billion euros more than in 2007.

Panayiotis Lafazanis, MP with the Coalition of the Radical Left (SYRIZA), said the budget will hit lower-income groups and also slash crucial social spending.