ECONOMY

2003 budget targets seem hard to attain

The Finance Ministry hopes to boost tax revenues by 2.2 billion euros in 2003 compared to this year, according to the budget draft unveiled yesterday. These are projected to rise to 37,700 million euros from the 35,492 million estimated to be collected this year. However, this optimistic projection does not seem to be based on anything sound when there is no evidence that revenues from stock market transaction taxes will recover – given the worsening doldrums of the bourse – and when the government has already announced extensive tax breaks as part of its overhaul of the tax system. The net revenue growth target in the current general budget has already been revised from 5.1 percent down to 4.2 percent. The budget draft provides for net revenue growth of 5.6 percent next year, which seems especially difficult to attain. Finance Ministry officials privately consider that the target of 4.9-percent growth to 4,570 million euros in company taxes is unfeasible. They note that companies this year are showing a significant drop in turnover and profits with a parallel rise in liabilities, and that non-listed firms will be taxed at a rate of 35 percent for income earned this year, which is 2.5 percent lower than the rate for 2001 income. The Finance Ministry had initially budgeted a 6.3-percent rise in company tax revenues in 2002, and this has now been trimmed to 4.4 percent. Personal income tax revenue also appears difficult to increase next year, given the scaled lifting of the lowest tax-free income bracket for salary earners. This will rise from 8,300 euros to 10,000 for four-member families, and to 20,000 euros for families with five members or more. Furthermore, the same officials expect income tax returns to rise considerably more than ministers expect. Such developments make the draft budget appear particularly ambitious, especially in view of the fact that the likely repercussions of US intervention in Iraq cannot be projected. Budget expenses this year are 839 million euros above target, which represent a 4.7-percent rise – the same as last year. Next year, ordinary budget expenses are projected to rise by 5.3 percent but Economy Minister Nikos Christodoulakis has not unveiled the list with individual ministry