Economy minister treads softly in solving problems

The government will very soon settle outstanding tax issues with hundreds of thousands of businesses and professionals and will also introduce tax reforms aimed at making Greece more attractive to businesses, National Economy and Finance Minister Giorgos Alogoskoufis told Kathimerini in an interview. Alogoskoufis also said that the public debt was worse than expected and could reach as high as 109 percent of GDP. But he also stressed that no shock therapy would be applied and that there would be no intervention in the social security system and labor market. Development would come through tax reform, measures aimed at slashing red tape and a new land policy which would imply international tenders for the sale of public land. Deputy Finance Minister Adam Regouzas is expected to present legislation to Parliament today which will provide for the settlement of all outstanding tax cases from 1999-2002 – even those that are currently the subject of litigation. Tax departments will send notices to hundreds of thousands of businesses and professionals, allowing them to pay their debt in 12 or 18 installments, depending on the amount. «There will be some temporary measures now. The budget needs revenues or it will go off the rails,» Alogoskoufis said, referring to the tax settlement. «It will be a generous settlement, even if I’m not in favor of them, but we haven’t many options. It will be generous because we need the revenue, but it will be the last.» Alogskoufis said that efforts to rein in public finances will be presented in the autumn, with the budget proposal for 2005. He accused the PASOK government of hiding deficits and leaving Greece with a higher debt than was previously stated. «The situation is worse than expected, but we haven’t seen it all yet. I estimate public debt will be 5-6 percentage points higher, and may go from 103 percent to 108 or 109 percent of GDP,» he said. «Obviously we will take steps to control the public deficit,» he added. «We will implement a three-year program, which will be easier since we won’t have Olympic expenses, and Brussels understands that.» When asked whether the government would raise the issue of reforming the social security system – something which the former government attempted in 2001 but then recoiled in the face of virulent opposition – Alogoskoufis was wary. «Not for the present,» he said. «We don’t want to get involved in clashes that lead to impasses. Let’s see how things develop and we’ll deal with them,» he said. Regarding the job market, he said, «We’ll look at that in time.» He said that development could come through sales of public land and by liberalizing major sectors of the economy, such as energy. «We will also institute reforms in public administration and the market, but that requires study, careful steps and tangible results,» Alogoskoufis said.