2002 budgetary boost
The Inner Cabinet yesterday approved the proposal for the 2002 state budget, opening the way for a series of tax breaks and incentives aimed at giving the economy a boost while also helping the government present a social face to the electorate. The meeting, under Prime Minister Costas Simitis, approved a 20-percent increase in the tax-free limit for all taxpayers, raising it to 8,400 euros (or 2,862,300 drachmas from the current 2.3 million) for wage earners and to 7,400 euros (or 2.5 million drachmas) for professionals. Also, the lowest tax brackets for wage earners will be scrapped. Taxes on businesses will be cut by up to 2.5 percent from the 35 percent that will be effective next year (from 37.5 percent now), at a rate corresponding to the percentage increase of jobs they create. Revenue stamps will be scrapped in all instances except for property rental payments. The State will also pay family subsidies to both husband and wife working in the civil service. On the other hand, repos will be taxed by 7 percent from January 1. Also, the property of off-shore companies will now be taxed. In terms of major indicators, development is forecast at 3.8 percent of GDP (from initial estimates of 4.5 percent). The surplus is expected to shrink from an earlier estimate of 1.3 percent of GDP to 0.8 percent. National Economy and Finance Minister Nikos Christodoulakis said that the 2001 budget would still show a surplus but this will be drastically reduced from the 0.5 percent forecast to 0.1 percent. The tax measures will create a wave of new jobs while helping to improve corporate profitability, Christodoulakis said. Simitis noted that the 2002 budget is being drawn up in a climate of uncertainty as to international political and economic developments. The September 11 terrorist attacks, he said, had worsened the situation. The budget’s chief aims were to speed up development, reduce the public debt and to fulfill his commitments for social policy, Simitis said.