ECONOMY

Deficit seen at 5.1 pct despite new taxes

The European Commission forecast yesterday that Greece’s budget deficit this year will be above 5 percent of gross domestic product despite a series of steps taken by the government to improve the country’s fiscal position. «Due to a less-than-favorable growth scenario and a prudent assessment of the revenue-enhancing measures… the Commission services project a deficit of just above 5 percent,» it said in a report. In early May, Brussels said in its spring forecast that persisting fiscal imbalances in Greek government finances are likely to lead to a budget deficit of 5.1 percent this year versus 5 percent in 2008. The Economy and Finance Ministry has a announced a series of steps, including higher taxes on alcohol and tobacco products and the introduction of a tax on dividends, in a bid to up budget revenues. On the costs side, the government has also trimmed public sector employment growth and implemented a wage freeze for public servants in 2009. Economy and Finance Minister Yiannis Papathanassiou is expected to unveil measures aimed at curbing Greece’s budget deficit in the coming days. Sources have said that among the options being examined by the ministry is the introduction of a tax on prepaid mobile phone users and further upping taxes on tobacco products.