The government is studying proposals to allow the repatriation of funds that are now managed by offshore companies or trusts in a number of tax havens. The repatriation measures, which could be included in the tax reform expected to be submitted to Parliament in September or October, could affect funds worth as much as 80 billion euros. Given the government’s worry about implementing the 2004 budget, whose expenditures appear to be spiraling out of control and whose revenues are much less than expected, such an inflow of funds could provide a significant, and unexpected, boost to the economy. The need to protect European markets from capital outflows to tax havens has led several European countries to take measures to repatriate funds. Italy was the first to provide incentives – that is, a tax amnesty – for the repatriation of capital and other property by individuals who had preferred to funnel their funds abroad rather than pay taxes at home. The previous Greek government attempted something similar in 2002 but then Economy and Finance Minister Nikos Christodoulakis was forced to back off because of a perceived impression that the government, already under attack over various aspects of its economic stewardship, could favor money laundering. The present government, not burdened in the same way, is seriously considering a scheme that would favor the repatriation of funds and other property. According to Alpha Bank’s economic bulletin, Credit Suisse estimates that the capital repatriated to Italy was worth 98 billion euros. Italy’s finance minister, Giuglio Tremonti, had presented the legal framework of Italy’s program to the council of European finance ministers (Ecofin) in November 2002. The «Tax Shield» program provided for a 2.5 percent tax on the value of the capital or other property. Those who took advantage of the law in order to acquire Italian Treasury bills or state bonds became immune from prosecution for past tax violations. The initial duration of the Tax Shield program was from November 2001 to May 15, 2002. It was extended twice, first to June 2002, and then to the end of 2003. The tax to be paid by those who repatriated their capital or other property after May 2003 rose to 4 percent. Italian banks Intesa and Unicredito have estimated that capital worth about 300 billion euros fell under the terms of the amnesty. Initially, the Italian government hoped to repatriate just 40 billion euros. In the end, they got nearly two-and-a-half times that amount. The German government has instituted its own plan, hoping to repatriate about 20 billion euros out of an estimated 300 billion that was illegally funneled abroad in the period 1993-2002. The German plan expires at the end of 2004. The Hellenic Banks’ Association (HBA) has submitted its own proposal in 2002. The proposal focused on liquid capital (deposits, portfolio investments) and on property transferred to offshore companies. The HBA estimated that a tax of 5 percent on repatriated capital could be imposed if those who failed to take advantage of the partial tax amnesty were warned that they faced heavier sanctions in the future. The HBA has also proposed that deposits transferred from tax havens into local accounts, including joint accounts, within six months of the law’s publication, be exempt from any tax. This would also apply to transfer of property and stocks in the form of a donation. Another feature of the HBA proposal would exempt from inheritance tax the beneficiaries of trust funds placed abroad if they repatriated those funds.