ECONOMY

Search on for growth incentives

The government is mulling the introduction of incentives aimed at boosting investments and getting the country back on a path toward growth, according to sources. The Finance Ministry is looking at ways to boost sliding investment activity and create jobs through the use of tax incentives for large-scale investments. Any tax breaks will also have to be in accordance with European Union competition rules, a ministry source said. Among the options being examined is lowering the corporate tax rate to 20 percent from the current 24 percent as of the start of 2011. The move would also help to prevent companies presently operating in Greece from moving to another country in a bid to take advantage of more favorable business environments. Other incentives being considered include lowering the tax rates on dividends distributed to foreign investors. Meanwhile, on the inflation front, data showed yesterday that Greece’s headline consumer price inflation remained steady at a 5.5 percent annual pace in August, a 13-year-high, the result of tax hikes imposed by the government under the terms of a European Union and International Monetary Fund bailout deal earlier this year. Month-on-month, consumer prices dropped 0.7 percent, the Hellenic Statistical Authority (ELSTAT) said. Tax hikes, including a rise in the value-added-tax rate to 23 percent, have pushed Greek inflation higher. The EU and the IMF raised this year’s inflation forecast for Greece to 4.75 percent from 1.9 percent. Consumer price inflation in the 16 countries sharing the euro slowed in August to 1.6 percent year-on-year from 1.7 percent in the previous month, comfortably below the European Central Bank’s target of just under 2 percent. «Domestic price pressures remain elevated, reflecting mainly higher VAT rates and recent hikes in a range of special consumption taxes. I expect inflation to move toward 6 percent over the next two months as a result of the introduction of heating oil prices in the consumer price index basket calculation.» Platon Monokroussos, a senior economist at Eurobank EFG told Reuters.