ECONOMY

Lower corporate taxes now, Athens chamber demands

The Athens Chamber of Commerce and Industry (EVEA) has sent a memorandum to the government asking for lower corporate taxes and more structural reforms. EVEA president Drakoulis Fountoukakos said yesterday that it was urgent for the government to lower the corporate tax rate from 35 to 25 percent. He said that the State, over the past 35 years, has kept increasing the tax burden: in 2001, state revenues from individual and corporate taxation, sales taxes and social security contributions from employers and employees was equal to 40.8 percent of the country’s gross domestic product (GDP), up from 18 percent in 1965. This, Fountoukakos said, places Greece at the top of the countries with the heaviest taxes. In addition, Greece has the second highest corporate tax rate in the EU behind France. The existing tax structure strikes a blow at competitiveness and the economy’s growth prospects, Fountoukakos said. He cited Ireland, where the top corporate tax rate is 12.5 percent, as an example to be followed, referring to that country’s exceptionally high growth rate over the past 10 years, a growth fuelled by private sector investment. Warnings In its memorandum, addressed to Prime Minister Costas Simitis, EVEA warns that a long pre-election period – elections can take place as late as early May 2004 – would have extremely negative repercussions for the economy, which may be growing at a fast pace but shows low competitiveness. «The economy’s capacities does not allow for handouts and fiscal relaxations and certainly no more delay in promoting structural changes,» the memorandum says. EVEA recalls that the so-called budget surpluses in 2001 and 2002 became deficits when the European Union looked closer at the government’s accounting methods. EVEA acknowledges the need for helping those with lower incomes but adds that this will only happen when the state limits its business activity and radically reforms the state administration. This would allow more money to be spent on social policies and attracting new investment. EVEA further warns against providing a minimum income for all, as has been proposed by Socialist MPs, further hirings in the public sector, and pay rises at double the inflation rate, as the government is preparing to give to civil servants.