Tax hikes in the offing
Smokers and drinkers will today be bracing themselves for a rise in the price of their favored poisons, as the government is set to announce a number of tax hikes in a bid for higher revenues as part of the battle to reduce the public deficit. Economy and Finance Minister Giorgos Alogoskoufis is due to unveil the measures after an inner cabinet meeting. He will also present the revised Stability and Growth program, which outlines three possible scenarios for the Greek economy’s performance until the end of 2007. The government plans to cut the deficit to 3.5 percent of GDP by the end of this year and 2.8 percent by the end of 2006, the deadline set by the European Commission for Greece to have brought the deficit below the eurozone ceiling of 3 percent. The main targets for tax hikes will be cigarettes and alcohol. The Finance Ministry is likely to adjust taxes so that the price of a pack of cigarettes will range between 1.40 and 3 euros. In total, the ministry is looking to boost public revenues by 500 million euros through the tax rises, which are set to kick in next month. The government will also seek a rise in VAT for products currently charged at less than the standard rate of 18 percent. Sources indicate that those goods subject to less than 8 percent VAT, such as books, will soon have their rates raised to that percentage, while the standard rate may rise to 19 percent. Alogoskoufis is also set to order tax authorities to intensify efforts to collect some 7 billion euros from 836,000 taxpayers who have outstanding debts to the State. Similarly, Deputy Finance Minister Petros Doukas yesterday informed ministries that only 45 percent of the spending entries included in the current budget will be covered for the time being.
