ECONOMY

No new taxes for the time being

The government yesterday ruled out introducing any new taxes in 2009 but left open the possibility of upping indirect tax levels next year in order to help lower Greece’s ballooning budget deficit. Finance Minister Giorgos Papaconstantinou, who returned from a meeting of Eurogroup ministers in Luxembourg on Tuesday, said the ministry will take a second look at tax breaks currently offered and favorable tax rates applicable on some income groups, such as athletes. Papaconstantinou admitted earlier this week that Greece’s deficit is expected to reach 12.5 percent of gross domestic product in 2009, rising from a shortfall of 7.7 percent of GDP last year. The higher-than-expected deficit is due to a drop-off in revenues, expenditure overruns and failure to properly measure the shortfall, the finance minister told reporters. Tax revenues, which have fallen sharply due to the slowing economy, are some 10 billion euros less than expected while the spending overshoot is estimated at some 5 billion euros. There will be no increase in indirect taxes in 2009 as the government intends to pick up efforts in collecting revenues, the minister said. According to sources, one of the options being examined by the recently elected Socialist government is upping taxes next year on fuel, alcoholic drinks and tobacco products in a move that could earn the state an additional 1.2 billion euros in revenue. Any changes to the tax law will be submitted to Parliament in the first quarter of 2010 after talks have been held with social and professional groups, according to Papaconstantinou. Regarding a tax on winnings from games of chance, which was originally to enter force in August, Papaconstantinou said it will remain in effect until the law is changed. The ministerial decision taken in September to suspend the tax was «illegal» and the law must be amended, he added. Meanwhile a draft copy of the 2010 budget will be unveiled early next month and tabled for lawmakers’ approval on November 20.