ECONOMY

Budget attacked from left, right

The 2006 budget, unveiled on Monday after several draft attempts, came under attack yesterday, with trade unionists accusing the government both of underfunding social policies and massaging the figures in order to obtain the desired deficit cut and business representatives calling for more radical measures, including an increase in indirect taxes. The executive body of the General Confederation of Greek Labor (GSEE) claimed, at a press conference, that public sector wage and pension rises will be lower than projected inflation. This, along with the non-adjustment of the tax-exempt income to take account of inflation, will further erode purchasing power, GSEE officials said. The unionists noted that, in the draft budget, the government has allocated 234 million euros less than it is legally obliged to to the Social Security Foundation (IKA), the largest pension fund for private sector employees. They implied that this and other budget items have been deliberately underestimated to keep the deficit at the promised level of 2.6 percent of GDP. GSEE said in order to meet the target, the government would have to increase tax receipts by 3.6 billion euros. GSEE also presented an opinion survey showing that the majority of respondents were dissatisfied with the government’s economic policy, especially the cuts in overtime compensation and the failure to come up with a scheme to compensate the neediest for the steep rise in the price of heating oil. ADEDY, the civil servants’ umbrella union, also pointed to the loss in purchasing power and called on its members to take part in the general strike jointly agreed upon with GSEE for December 14. Economy and Finance Minister Giorgos Alogoskoufis said that wage and pension raises will be «the highest that current circumstances allow.» He added that the burden of the fiscal adjustment will be borne by the state itself, through spending cuts, and tax evaders. On the employers’ side, Drakoulis Foundoukakos, president of the Athens Chamber of Commerce and Industry (EBEA), said the measures envisaged in the 2006 budget were not tough enough to put public finances on sounder footing. «The 2006 budget is far more difficult than this year’s because, in order to cut the deficit, we must further cut primary state spending, substitute real privatizations for the failed model of stake offerings, a real opening of the markets for a virtual one and, of course, increase revenues through a crackdown on tax evasion,» he said. The EBEA chief said that «real» measures are something similar to what the so-called Grand Coalition partners – the Christian Democrats and the Social Democrats – agreed to in Germany: increases in indirect taxation and pay cuts in the public sector in order to limit the budget deficit and increase enterprise productivity. «The demands of the type ‘give more to the many and the economically disadvantaged’ must be accompanied by persuasive and applicable proposals specifying where the extra money for such a policy is to be found. Our proposal is that, if we want to cut the fiscal deficit faster and at the same time find extra resources to support the incomes of the economically disadvantaged and drastically reduce personal income taxes, there is no alternative solution to raising indirect taxes,» EBEA said in a statement released yesterday.