ECONOMY

Share dividends hit with tax

Stock dividends and share capital gains will be taxed at a rate of 10 percent in 2009 as part of reforms aimed at boosting budget revenues and catching tax cheats, the Finance Ministry said yesterday. Rising interest rates and a slowdown in the global economy have started to bite into Greek economic growth, as budget revenues so far this year trail well behind annual targets. Economy and Finance Minister Giorgos Alogoskoufis said the «new taxes will help broaden the tax base as the government moves to stamp out tax evasion. «We have already made significant steps in tackling evasion but it is clear that incomes need to be better taxed,» he said. The reforms, approved earlier in the day at a Cabinet meeting, also include the abolition of a 10,500-euro tax-free threshold for the self-employed and its replacement with a 10 percent income tax rate. Greeks are better off than many of their European peers according to Alogoskoufis, as direct and indirect taxes paid in 2006, along with social security contributions, amounted to 31.4 percent of Gross Domestic Product (GDP) versus almost 40 percent in the EU. As a sweetener to the tax reforms, a 0.15 percent tax on sales of stocks will be dropped while the corporate tax rate will be lowered to 20 percent by 2014 from 25 percent currently. Taxpayers owing money to the government – estimated to be worth some 17 billion euros – will be offered favorable terms to pay their debts as the government scrambles to meet this year’s fiscal goals. According to data from the first six months of the year, Greek budget revenues rose 5.7 percent, falling well short of the targeted 12.1 percent annual growth rate. [email protected]