In a bid to revitalize the Greek economy and simplify the tax system, Finance and Economy Minister Giorgos Alogoskoufis yesterday announced a raft of fiscal changes, including annual cuts worth 150 million euros, aimed at giving individuals and businesses a foot up. «We are enhancing the growth potential of the Greek economy, correcting some of the great injustices of the tax system and promoting transparency, simplicity and efficiency,» said Alogoskoufis. His proposals were approved by the Inner Cabinet yesterday and are due to be put before Parliament tomorrow. They should pass into law by the end of the year. They involve a four-step program comprising tax breaks for individuals, tax cuts for businesses, the standardization of controlling measures and the setting up of a new body to deal with financial crime and tax evasion. The minister emphasized that a key element of his reforms was to ease the tax burden for low-paid workers and pensioners. One of the main measures he announced to this effect was an upping of the threshold for tax-free income from 10,000 to 11,000 euros per year. Those earning an annual income within this bracket will save 150 euros a year in taxes from 2005. Non-taxable income for all other earners will rise to 9,500 euros from 8,400 euros. Alogoskoufis said that high-income and middle-income taxpayers would save some 50 to 90 euros annually. The interest discount that mortgage-payers receive will rise from 15 to 20 percent, meaning that anyone paying a mortgage will have the equivalent of 20 percent of the amount they pay in interest annually deducted from the salary they declare at the end of the year. A similar scheme will operate for medical expenses, main residency rent, housing expenses for children studying abroad and private tuition fees. Under the new tax regime, 20 percent, instead of 15, of the value of annual bills falling within these categories will be subtracted from taxpayers’ declared salary. Among other measures aimed at individuals, Alogoskoufis announced tax breaks for people who decide to use natural gas in their homes and for workers who relocate from urban areas to the regions in order to take up jobs. The finance minister also announced a range of measures designed to «invigorate investment and development in Greece and create jobs.» Most prominent among them are the corporate tax reforms. The rate paid by businesses is set to drop from the current 35 percent to 25 percent by 2007. The taxation rate for personal businesses will be cut from 25 to 20 percent over the same period. Firms will also be able to deduct half of their research and development from their net earnings. «One of our main aims is the development of technology for the production of new products and the improvement of existing ones in order to boost the competitiveness of Greek businesses,» said Alogoskoufis. Other measures include the replacement of the financial crimes squad (SDOE) with a new body which will have enhanced powers and be immediately answerable to the economy and finance minister. The organization will focus on investigating tax evasion, illegal trade and financial crime. It will have the ability to freeze bank accounts, seize assets and bypass privacy laws in order to obtain suspect’s personal details. Its employees will wear distinctive clothing when conducting investigations and, after appropriate training, some will be allowed to carry guns in extreme cases.