ECONOMY

Move to calm nervous taxpayers

Less than a week after the government unveiled the latest set of measures aimed at lowering the budget deficit, Economy and Finance Minister Yiannis Papathanassiou yesterday ruled out plans for further tax hikes on the condition the economy meets optimistic government targets. At a time when many European Union member states have increased government expenditure to encourage consumer spending, Greece has upped taxes to help control its budget deficit that has been breaching European Union rules for a number of years. Last week the Finance Ministry announced it will slash pay hikes for public sector employees in a bid to contain budget costs and impose a one-off tax on high income earners to shore up revenues. Papathanassiou told NET state television yesterday that growing speculation in the press about new tax measures is not accurate, while pointing out however that any relevant decisions also depended on the state of the global and local economy. «With the steps we have taken and our planning, we believe that that we won’t need anything else,» he said. «If, however, conditions change and we don’t achieve the growth rate we expect, then and only then we will need to do something.» Among the steps reportedly being examined by the government are possible property and fuel tax hikes. Greece projects economic growth to come in at an annual rate of 1.1 percent this year versus the European Commission’s 0.2 percent gross domestic product forecast for the country. Greece is under growing pressure from the European Commission to cut state spending to bring the growing budget deficit under control. 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. Greece is expected to be given until the end of 2010 to lower its budget deficit to below 3 percent of GDP.