NEWS

Private cash, tax cuts spur the economy

In a bid by the government to reduce the role of the State in the economy and to get private investors more involved, officials in charge of the economy are thinking of incentives to spur building activity, three waves of privatization and a new tax regime which will support business competitiveness. Among the measures being considered is the scrapping of the tax on valuable real estate (known as FMAP) and the return of tax breaks through deducting from taxable income the interest paid on housing loans. The government is also thinking of not implementing the recently decided measure of applying value-added tax to real estate purchases and of keeping the tax values of property (known as «objective» values) unchanged. As it tries to deal with its biggest problem – the state of public finances and the restrictive measures that Brussels may demand – the government is working on an economic policy that will focus on controlling state spending, gradually reducing the role of the State and mobilizing the private sector in the economy. «The role of the State in the economy must gradually be reduced and the presence of the private sector across a wider area has to be felt more strongly,» Kathimerini yesterday quoted National Economy and Finance Minister Giorgos Alogoskoufis as saying. The government plans to present a new privatization program by the end of this month. This will entail three waves: The first involves the simple selling of shares by the end of this year; the second, to take place next year, involves privatization of sectors that were closed to private investors, such as ports, airports and other state assets; the third involves the State’s monopolistic control of energy, transport and other sectors. The principal tools to achieve all this will be the development law and a new tax regime which will support intensive capital investments by uncoupling the level of investment from the number of jobs that must be created. Also, large companies will see their tax reduced to 25 percent in 2005 and small companies to 20 percent. Another measure under consideration is a possible tax amnesty for money that has been stashed abroad.