ECONOMY

EU to set 2010 fiscal deadline

A meeting of Eurogroup finance ministers in Brussels today is expected to give Greece until the end of 2010 to lower its budget deficit to below 3 percent of gross domestic product (GDP) as the government weighs up its tax options. Senior government officials have left open the possibility of the Economy and Finance Ministry increasing taxes, or introducing new levies, to boost state revenues sagging under the weight of the economic slowdown. «There is constant talk about new initiatives, new measures,» said government spokesman Evangelos Antonaros, who ruled out any hikes to value-added tax. Among the options being mulled by the ministry is the introduction of an additional 1,000-euro tax on those with an income of more than 50,000 euros. A move which may then be followed by a further broadening of the tax base. Other options include allowing homeowners to legalize illegal extensions made to their homes for a fee, in what would be a solid revenue raiser for the budget. Brussels and Athens disagree on expected growth rates for this year, a figure which has a major role in shaping the country’s fiscal policy. The European Commission, the EU’s executive arm, sees Greece’s economy expanding at a rate of 0.2 percent this year but the Finance Ministry expects the figure to be much higher, around an annual rate of 1.1 percent. Last month, the European Commission started disciplinary steps against Greece, along with another five European Union countries for exceeding the bloc’s budget deficit limit. Sources said today’s Eurogroup meeting is likely to give Greece until the end of 2010 to comply with EU budgetary goals. There was some talk of allowing Greece more time to lower its deficit, depending on economic conditions, but this was dropped, according to one source. This would merely have resulted in a lengthy debate about the severity of the slowdown, the source added.