ECONOMY

Papandreou promises fewer taxes, reduced unemployment

George Papandreou, the ruling Socialists’ prime-ministerial candidate at the March 7 election, tried to woo both employers and wage earners in a speech at the National Bank of Greece, promising a stable tax environment and higher pay rises for low incomes and presenting a mixture of concrete measures and general guidelines. Addressing an audience mainly made up of bankers, businesspeople and trade unionists, Papandreou made five broad commitments: To «ensure a stable economic environment and accelerate convergence» to the levels of other EU countries; to pursue a «radical modernization of investment (opportunities) through a series of bold measures against bureaucracy and a reform of the incentives system;» to provide «greater freedom for entrepreneurship» by freeing it from the «dead weight» of high taxation and corruption among authorities; to broaden access to education and employment; and to provide a fairer income distribution in favor of the young, the disadvantaged, and the country’s poorest regions. On tax policy, Papandreou proposed a stable environment by extending the provisions of a recently passed law on incentives to investment which provides for a 10-year, stable and low tax regime for major investors. Papandreou promised to keep taxes unchanged for at least 10 years, after lowering the tax on corporate profits, initially to 30 percent from the current 35 percent, and then to 25 percent. He added that he would link the personal income tax brackets to inflation. The indexation of income tax brackets to the inflation rate was abolished in 1990 and, since then, there has only been one adjustment, in 2001. This has hurt income tax payers, who saw their earnings rise, as a result of inflation, to levels that put them into a higher tax bracket. Papandreou also promised to end the present system of auditing of company books, saying it lumped the good together with the bad and hindered performance. The recently anointed president of the ruling Panhellenic Socialist Movement (PASOK) also repeated his call for non-state-controlled universities, a position that many of his fellow PASOK members have resolutely opposed. Papandreou added that he would raise spending on education to 5 percent of the country’s GDP, a position also adopted by opposition New Democracy. Other concrete targets include a reduction in the unemployment rate to 6 percent and female unemployment to 8 percent within four years.