ECONOMY

IMF has seasonal bonuses in sights

The Christmas and Easter bonuses to employees could go if the government heeds the recommendations of the International Monetary Fund in its report on Greece yesterday as to how it could reduce the public debt. In addition to the estimates that Greece is headed for 1.7 percent recession this year and, should it not pass any new measures, that its debt will soar to 116 percent of gross domestic product, the IMF makes mention of specific measures needed to bring the budget deficit under control. In order to contain spending, the IMF recommends the further reform of the social security system, including abolishing the Christmas, Easter and summer holiday bonuses, a reduction in the number of civil servants, limiting salary raises, the simplification of administrative procedures with the creation of a one-stop shop in each public organization, the containment of spending on defense to the average of the Organization for Economic Cooperation and Development and continuing reforms in the health sector. The IMF also addresses the issue of increasing revenues and proposes the reduction of tax exemptions, reform of taxation for the self-employed, a reduction in tax incentives for investment, an increase in the lower value-added tax brackets as well as the inclusion of fewer products and services, the use of market value for property taxation and the imposition of a single tax system for professional and residential properties. With the adoption of these measures, the IMF believes that the Greek budget deficit could shrink by about 1.5 percent of GDP per year. The government is already geared toward cutting a great number of tax exemptions, whose total cost for the state comes to 7 billion euros a year, or 2.7 percent of GDP. On aggregate, there are 1,033 categories of tax exemptions, with about one in every two taxpayers using at least one of these each year. Economy and Finance Ministry sources suggest that all tax exemptions will be re-examined, adding that the system does not operate today on social criteria, and thus bolsters the economically strong social groups.