UPDATED: Greece cuts business tax to help pandemic recovery

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Greek Prime Minister Kyriakos Mitsotakis announced new tax measures on Thursday to help the economy recover from the effects of the coronavirus pandemic, cutting the basic business tax rate by two percentage points to 22% from next year.

Greece is also suspending a special solidarity levy imposed during its years of economic crisis. and cutting pension fund contributions by three percentage points for 2022.

“The government has shown that its constant priority is to reduce taxes before, during and after the pandemic,” Mitsotakis said in a statement announcing the measures.

In total, the finance ministry said the measures would cost 900 million euros ($1.08 billion) this year and 1.6 billion euros in 2022.

Mitsotakis’ centre-right government holds a strong lead in opinion polls but it has faced increased pressure over its handling of the pandemic as case numbers have climbed dramatically and the economic costs have mounted.

Athens was already planning to spend more than 14 billion euros this year to support businesses and employees who are out of work due as a consequence of lockdown measures. It spent about 24 billion euros in 2020 in subsidies and loans to companies to maintain jobs.

So far, the measures have pushed Greece’s public debt rate to over 200% of gross domestic product and left it with a budget deficit last year estimated at 7.2%.

Separately on Thursday, the national statistics office reported that the closely watched primary budget balance, net of interest payments, had fallen into deficit in 2020 after consecutive years of surpluses as tax revenues dried up and government spending soared.

Photo: The Greek flag waves over the Parthenon on Acropolis Hill in central Athens, Greece. EPA-EFE/SIMELA PANTZARTZI

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