ECONOMY

New austerity plan nearly ready

The Finance Ministry is looking into introducing tax measures worth 8 billion euros for the 2012-15 period, which will be presented to representatives from the International Monetary Fund, European Commission and European Central Bank – collectively known as the troika – at the start of April.

Proposals which have been prepared and handed over to the ministry?s top officials relate to tens of measures, including slashing tax reductions for high income earners, introducing a tax on soft drinks and juices, increasing road tax and upping property levies.

At the Finance Ministry, officials have started weighing up each measure against its potential political cost.

One proposal, which was quickly dismissed due to potential public reaction, was the introduction of one-off tax being imposed on all taxpayers, but this was binned due to the limited revenue potential from the move and the strong opposition it would cause.

The first measure being assessed is reducing tax deductions for those who declare an income of above 60,000 to 70,00 euros. There are currently 980 tax deductions, according to Greek law.

The higher income bracket will no longer be able to claim expenses such as medical bills, rent payments, mortgage interest costs and private tuition expenses against their taxable income, under the proposal.

Tax deductible expenses cost the budget some 8 billion euros per year and the government wants to minimize this amount.

Another measure being examined is the government dropping favorable value-added tax rates applicable on the country?s islands.

Despite the government formally denying any such intention, the Finance Ministry is believed to be studying the idea of implementing across-the-board VAT in a move that could bump up revenues by 560 million euros.

Another measure under consideration is allowing taxpayers with real estate asset in excess of 400,000 euros to settle outstanding debts from the 2000-09 period.