Greek Government 2009 Draft Budget Includes Tax Reforms

Ulrika Lomas, Tax-News.com, Brussels

08 October 2008

In the 2009 draft budget presented to parliament on Monday, the Greek Finance Minister George Alogoskoufis, unveiled his proposals to make fiscal reform the centrepiece of its economic policy which is aimed at maintaining growth, increasing employment and social cohesion.

By introducing significant tax reforms, the conservative government intends to reduce the budget deficit to 1.8% in 2009. The key tax initiatives outlined in the draft budget include tax relief for individuals, a further reduction of income tax, an expansion of the tax base and measures to prevent tax evasion.

Revenues from direct taxation are forecast to increase by 18.1% from this year to EUR26.9bn, while income from indirect taxation is estimated at EUR34.7bn, showing an increase of 10.4% on 2008.

The government remains determined to balance its budget by 2010, by reducing the deficit by at least 0.5% of GDP annually.

Eager to emphasise that Greece’s economy was faring well given the current global financial turmoil and confirming the government’s pledge to fully guarantee all bank deposits in the country, Alogoskoufis did make clear that the 2009 draft budget had been drawn up under difficult circumstances, taking into account the effects of the global economy, the international growth of inflation and economic slowdown and Greece’s own eurozone obligations.

The government is predicting 3% growth in 2009. Unemployment is expected to drop slightly to 7.3% compared to 7.4% this year, and inflation is expected to rise to 4.5% from the predicted 2.8%.

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