IOBE: Climate for reform is improved after the election
The fresh popular mandate of September 16 will afford both the government and opposition greater freedom from considerations of political cost and facilitate the search for social and political consensus, a report said yesterday. «The election of the new government provides an opportunity for a new economic policy far from the stereotypes of the past, which will implement the will of society for reforms,» the employer-sponsored Foundation for Economic and Industrial Research (IOBE) said in its quarterly report. IOBE says that the attainment of consensus is absolutely necessary for the promotion of solutions to key issues, such as reforms in social security, public administration and education. «For economic policy to be more effective and promote the overdue reforms, it must be marked by resoluteness, continuity, consistency and managerial competence,» the report says. According to IOBE, fiscal consolidation must continue at a faster pace. It will also have to be based on a long-term plan which should include, among other things, an increase in revenues, resulting from a broadening of the tax base, and the tackling of tax evasion and the underground economy. The prerequisites for such progress are the reform and simplification of tax legislation, reform of tax administration through the modernization of the collection mechanism and a lowering of its costs, as well as the consolidation of a climate of trust and consistency in the tax system, primarily through the abolition of regular tax amnesties, the report said. IOBE argues that the time is ripe for the reform of social security and dialogue must be comprehensive, effective and speedy. According to the report, on the basis of the Greek economy’s performance in the first half of the year, it can be forecast with confidence that the pace will be steady for the whole year, with the growth of gross domestic product (GDP) exceeding 4 percent. Inflation will slow down to less than 3 percent, while employment is forecast to increase at an average annual pace of 1.6 percent in the 2007-2009 period and unemployment to fall below 9 percent. Tax bill Economy and Finance Minister Giorgos Alogoskoufis said after conferring with the prime minister yesterday that the first bill to be submitted to Parliament will concern the fight against tax evasion, and that the pledges for the abolition of the tax on first-home purchases and the lowering of inheritance tax to 1 percent will be implemented as soon as possible. Alogoskoufis said the government’s top priority is the drafting of the 2008 budget, which will aim «to continue the successful fiscal adjustment of the last three-and-a-half years, with a view to attaining a balanced budget by 2010.» The second aim is to continue work on the best possible utilization of European Union investment subsidies under the Fourth Community Support Framework program for the 2007-2013 period. «It is a great growth opportunity for the country, for the development of broadband infrastructure and digital services, as well as the training of human resources necessary for the development of the economy in coming years,» Alogoskoufis said.
