NEWS

Tax breaks, employment in new budget

The government is taking steps to strengthen the social nature of its economic policy in light of its finalizing the main indicators of the 2002 budget today. Sources say that the Inner Cabinet, in an effort to ease the consequences of the global slowdown and to gain the support of unions in view of the coming changes to social security, will today approve an increase of the tax-free income limit from 2.3 million drachmas today to 2.9 million. It will also tie the reduction of tax brackets for businesses with the increase in employment. Sources in the General Confederation of Greek Labor (GSEE) said last night that the increase in tax-free incomes will help incomes for 2001 so that the tax break will be felt immediately and also from the start of the new year through the reduced amount of tax kept from salaries. Also, the tax bracket for businesses will be lowered in a way corresponding to the percentage increase of people they employ, up to three percentage points. Prime Minister Costas Simitis last night gave National Economy and Finance Minister Nikos Christodoulakis approval to speed up tax reform and also approved of the final indicators of the budget that will be presented to Parliament next Wednesday. Domestic competitiveness and employment will be supported and commitments for social policy will be kept, Christodoulakis said as he left the prime minister’s office. GDP growth is forecast at 3.8 percent, with a surplus of 1 percent and with the public debt continuing to drop. The new team in charge of economic policy is also looking at ways to manage the assets of social security funds in a more fruitful way. Christodoulakis also met with the leadership of the central bank for talks on economic policy but also on the effects of the euro. According to Bank of Greece Governor Lucas Papademos and deputy governors Panayiotis Thomopoulos and Nikos Garganas, the adoption of the new currency will have a minimal effect on inflation, and limited mainly to the first quarter of 2002. There is talk of an added burden of 0.1 percent to 0.2 percent, with forecasts of inflation at 2.5-2.6 in the first months of the year (as long as fuel prices remain low). The Bank of Greece also expects growth at 4 percent of GDP in 2001. Composer in hospital