ECONOMY

Gov’t unveils first batch of tax measures

The government yesterday announced the first details of its long-heralded tax reform, simplifying procedures concerning the Books and Records Code, tax registration, and filing periodic value-added tax (VAT) statements. The package of 25 measures, presented by Economy and Finance Minister Nikos Christodoulakis, are part of the first of three phases in which the reform is to be completed and put into effect on January 1, 2003, according to the plan approved by the Cabinet yesterday. They include abolition of the obligation to register a series of books and records, rationalization of fines, the possibility for bookkeeping on CD-ROM, and abolition of the obligation to file periodic VAT statements in numerous instances. They also include the introduction of compulsory cash registers for a series of enterprises, and books for others, possibly including gas stations. Christodoulakis said the complete first batch of measures will be unveiled next week. The second batch, due to be announced on July 15, will concern changes in taxation of real estate, inheritance and donations. The government has indicated it will rationalize the large number of existing levies on real estate. The imposition of VAT on new buildings is expected to be postponed again. The second batch is also projected to include measures regarding the taxation of the large number of offshore companies, most of which, as owners of only one real estate item, are considered a source of extensive tax evasion. An outline of the third package, which is seen as the lynchpin of the reform and will concern changes in income taxation, is expected to be announced toward the end of next month. It is projected to overhaul the tax scale, with extensive changes in the system of tax breaks and raising the tax-free ceiling for the lowest income earners. Details will probably be announced by Premier Costas Simitis at the annual keynote economic address in Thessaloniki in September; the highest income tax rate is expected to be reduced to 35 percent from 40 percent and the lowest to be raised from 5 to 15 percent, while company taxation will be lowered to 30 from 35 percent. The tax-free ceiling is projected to be raised to around 11,700 euros. Christodoulakis said the reform will aim to simplify and provide incentives for work and investment. The ministry is also studying the possibility of abolishing the obligation to file income tax statements for a large number of wage earners and pensioners, «under certain conditions.» Papadopoulos said Citigroup Asset Management has a diverse range of products for individuals seeking private insurance for their old age. These range from equity mutual funds to others focusing on fixed income, money market and asset allocation.