NEWS

Special tax privileges in the spotlight

The government yesterday presented a draft budget for 2003, forecasting a growth rate of 4.1 percent and inflation of 2.5 percent at year’s end. Included in the draft, which was submitted to Parliament, is a commitment to re-evaluate the complex web of so-called «tax expenditures» in a bid to secure funds at a time when the private sector appears unable to boost revenues because of falling profits. Senior Finance Ministry officials say that these special tax breaks are estimated to cost about 300 million euros (100 billion drachmas). The draft budget’s preamble says that all these breaks, which are said to number more than 850, will be examined and that only those which are found to serve real needs will be maintained. These breaks are the result of decades of wrangling between governments and special interest groups and are a kind of vested interest for certain groups, which translates into a form of subsidy for the fortunate ones benefiting from them. «The budget will strengthen the economy and offer security and safety to Greeks and businesses,» Deputy Finance Minister Giorgos Floridis said after tabling the draft in Parliament. He stressed that it aimed for a 0.5-percent surplus through «the biggest public investment program ever in Greece.» The 13-percent increase in public investments is aimed at helping prepare for the Athens 2004 Games and is double this year’s expense, coming to 6.2 percent of national output. Prime Minister Costas Simitis, speaking after a meeting with the board of the Bank of Greece, said that the Greek economy is capable of withstanding the EU’s economic slowdown, falling equity markets around the world and higher oil prices. But he stressed the need for caution in the face of these developments. «There are no problems in the Greek economy, only global uncertainties,» he said. He warned of the dangers posed by high inflation, unchecked credit and fiscal expansion, saying that these could jeopardize economic growth. The final proposal is to be presented to Parliament in November. Officials fear that a possible war in Iraq could affect the budget’s figures.