Greek finmin defends new taxes as economy slows

01 Sep, 2008

Greece's recently announced tax measures were necessary to keep the budget gap safely below the European Union's 3.0 percent limit, the Greek finance minister said in a newspaper interview published on Sunday.
Last week Greece unveiled a 10 percent tax on capital gains and dividends as part of a package to boost budget revenue and prevent a derailment of public finances as the economy slows.
Greece was removed from the EU's so-called excessive deficit procedure after slashing its fiscal gap to 2.8 percent of gross domestic product, ending three years on the black list of budgetary offenders.
The country's centre-right government is aiming for a deficit of 1.6 percent this year, a target economists say will be tough to reach. "We want to be at a safe distance from 3.0 percent, not just below it," Finance Minister George Alogoskoufis told Sunday's Kathimerini newspaper.
"Apart from the (global financial) crisis, there is a need for Greece to attain a fiscal adjustment of about 0.5 percent of GDP every year until it reaches a balanced budget. For as long as there is a deficit we must be reducing it by half a percentage point. It's not an insignificant amount."

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