ECONOMY

Crisis prompts new tax measures

The Economy and Finance Ministry unveiled tax measures yesterday aimed at increasing budget revenues and providing relief to small businesses, along with initiatives to tidy up government finances. Recently appointed Economy and Finance Minister Yiannis Papathanassiou said he will reinstate a 10,500-euro tax-free threshold for the self-employed that had been dropped by his predecessor in August last year, which hurt the conservative government’s popularity. Taxes on tobacco and alcoholic drinks – apart from wine – will be increased to cover the shortfall, earning the government an additional 350 million euros. «In these difficult conditions, we are moving ahead with adjustments and changes to the tax policy announced, securing at the same time budget goals,» he told reporters. In Greece’s European Union stability plan, submitted to Brussels last week, the government expects a budget deficit of 3.7 percent of gross domestic product this year, before narrowing to 3.2 percent of GDP in 2010. The Finance Ministry expects economic growth to slow to an annual pace of 1.1 percent in 2009, from around 3 percent last year. The European Commission believes Greece’s economy will expand at a rate of just 0.2 percent this year. Among the fiscal measures announced yesterday are changes to the property tax (ETAK). On the expenditure side, the ministry plans to save about 500 million euros by reining in hirings, overtime and travel expenses. Questioned on whether he believes the European Commission will launch the excessive deficit procedure against Greece – which may lead to financial penalties – the minister refrained from answering. «Regardless of what the Commission does, we should put some order to state finances. This will help us secure lower costs to refinance (state) debt,» he said. [email protected]