A simpler tax system
Economy and Finance Minister Nikos Christodoulakis yesterday unveiled wide-ranging tax reform proposals aimed at simplifying the exceedingly complex system and making it fairer. The proposals are the work of a committee of experts and will form the basis of a dialogue with businessmen and unions. Conscious of striking a balance between conflicting needs, such as the provision of incentives to businesses and individuals to help the economy grow faster and the need to maintain state revenue, the committee came up with a balanced proposal that combines a reduction in the top income tax rate with the abolition of several tax breaks. It also expresses the desire for lower corporate taxes but does not make specific commitments. Thus, whenever the reforms are enacted, they will be nowhere near as bold as those made in other European Union countries, such as Sweden and Germany. The top income tax rate, recently reduced from 45 to 40 percent, will be further reduced, to 38 and, then, 35 percent. The tax-exempt portion of income will increase from just over 7,000 euros to 10,000 euros. All stamp duties are eliminated, as will be any taxes in favor of «third parties,» meaning, certain professionals’ funds. Among the abolished tax breaks are those on rent, spending on consumer goods, and acquisition of mutual funds. The breaks on health spending, insurance premiums and home acquisition are retained. Despite the timidity of the proposals, especially concerning corporate taxes, the Federation of Greek Industries (SEV) welcomed the proposals. «We welcome the intention to simplify the system and the general philosophy of the proposals,» said SEV chairman and executive president, Odysseas Kyriakopoulos. Kyriakopoulos voiced his support for a reduction in direct taxation and he said he would even support a rise in indirect taxes to compensate for lost revenue. SEV officials were especially pleased by Christodoulakis’s announcement that the government wished to eliminate any taxes difficult to administrate, and which contribute little to state revenue and the committee’s proposal for a reduced tax on fuel for industrial use. There were also voices opposing reform: former Prime Minister Constantine Mitsotakis demanded to know how Christodoulakis could envisage tax reform «at the same moment that the budget presents an enormous deficit.» The 2002 budget is projected to show a surplus, but first-quarter revenues are lagging behind target. «Once again Panathinaikos showed that they are a very good side and very tough opponents. They had quality players in attack who provided a serious threat to us at the end of the game.»
