Plugging the budget hole

One wonders about the fate of Deputy Finance Minister Adam Regouzas after the dressing-down he received from Prime Minister Costas Karamanlis, who forbade him to take part in last week’s parliamentary debate leading up to Sunday’s confidence vote. What is certain is that Regouzas’s basic problem – empty state coffers – is indeed serious. State revenue rose by only 4 percent between January and May, far short of the annual budget target of 11.5 percent. We are facing a fiscal disaster which, given the European Union deadline of end-2006 for getting things under control, could lead to an economic crisis, since the government will be forced to cut state spending even more stringently and impose new taxes. Karamanlis reportedly met this week with Economy and Finance Minister Giorgos Alogoskoufis, giving him the authority to beef up state revenues if new taxes, and all their associated problems, are to be avoided. The same sources said that Alogoskoufis, who has already taken the first steps to activate what has been (for various strange reasons) a moribund tax collection system, is preparing a public information campaign for September. The essence of its message will be that any merchant, manufacturer, doctor or industrialist who fails to issue a receipt is not only stealing from the state but from the people themselves, since the state will have to recoup any missing tax revenue by imposing still more taxes. Meanwhile, the Finance Ministry is considering a legislative amendment requiring taxpayers to supply, along with their income statements for 2006, receipts for products and services purchased up to the value of 4,000 euros. For amounts below that figure, the difference will be subtracted from the 11,000-euro tax-free income allowed for wage-earners and the 9,500-euro minimum for other taxpayers.

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