ECONOMY

Ministry to offer sweetener for taxes

The Finance Ministry is expected to offer taxpayers owing money to the state more favorable terms to repay their debts as it struggle*s to meet this year’s fiscal targets. Taxpayers’ debts currently total 17.6 billion euros, nearly 8 percent of gross domestic product, of which only about one-third is expected to be collected. In a bid to up budget revenues, the ministry is likely to reduce penalties by up to 80 percent and give taxpayers, some 640,000 debtors, the chance to pay off their debts with an extended payments program. Ministry sources described the measures as «a generous incentive that will encourage those who owe money to pay up in order to avoid further checks from the tax office.» Of the 17.6 billion euros owed, the government has effectively written off about 12.1 billion euros which it considers will not be paid. A large chunk of the doubtful debts have arisen from different state-controlled businesses. By the end of the year the incentive is estimated to have earned the ministry about 1 billion euros. Data released last week by the Finance Ministry showed that revenues rose 4.3 percent year-on-year for the first six months of the year, falling well short of the 13 percent target for the year. The deficit at the end of June stood at 8.6 billion euros versus 6.3 billion euros in the same period one year earlier. Greece is struggling to meet its budget goals as a slowdown in global economic growth has started to weigh on the domestic economy. Authorities are banking on newly introduced taxes on property and fuel to help support revenue growth in the last few months of the year. The ministry is also believed to be putting the final touches to a number of new taxes, including a levy on share dividends. The threat of the European Union’s excessive deficit procedure being initiated against Greece has once again resurfaced. Apart from the risk of Greece missing this year’s fiscal targets, a likely revision of 2007 data indicates that the country’s budget deficit may have exceeded the 3 percent threshold.