ECONOMY

Gov’t resorts to one-off measures to rescue budget

The Economy and Finance Ministry said yesterday it will impose a one-off tax on high income earners and will limit pay hikes to civil servants this year in a bid to reduce state spending, boost revenues and curb a growing deficit. Greece is scrambling to contain its fiscal gap as a slowing economy results in lower revenues. The government, which projects a fiscal shortfall of 3.7 percent of GDP this year, unchanged from 2008, announced a series of one-off tax measures. «The decisions we announce today are difficult,» Economy and Finance Minister Yiannis Papathanassiou told reporters. «The government wants to boost the credibility of the Greek economy.» Those earning 60,000-80,000 euros a year will pay a one-off 1,000-euro tax contribution, those earning 80,000-100,000 will pay 2,000, those earning 100,000-150,000 will pay 3,000 and those earning over 150,000 will pay 5,000 euros, Papathanassiou said. «We estimate that we will collect 250 million euros from the one-off contribution,» he added. Low-salary public servants will get a one-off boost of between 300-500 euros, instead of an annual increase, and pensioners will be supported as well. «With steps we have already taken and the steps announced now, we are creating a safety net for the Greek economy and the country against the crisis,» added the minister. Additionally, the country’s 300 members of Parliament will pay a levy amounting to 5 percent of their salaries this year, with the proceeds going to a special fund to combat poverty. This is a «symbolic act,» Papathanassiou said. Greece is under growing pressure from the European Commission to cut state spending to bring a growing budget shortfall under control. Economic growth in the country will slow to 0.2 percent this year and the deficit will widen to 3.7 percent of gross domestic product, according to the Commission. The European Union has set a limit of 3 percent on deficits. The Commission started procedures last month to place Greece back under surveillance for its persistent budget shortfalls. Ireland, France, Spain, Latvia and Malta were also singled out.