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Context of 'March 29, 2005: Greek Government Raises Tobacco and Alcohol Taxes to Combat Budget Deficit'

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Greece admits it joined the euro single currency in 2001 on the basis of figures that showed its budget deficit to be much lower than it really was. Eurozone states are expected to have deficits below 3 percent of gross domestic product, but revised data show Greece has exceeded that limit since 1999. Greek press reports suggest the country’s budget deficit in 1999 was 3.38 percent. The problem was discovered by Eurostat, the EU’s statistics agency, when it visited Athens last week to examine Greece’s current budget figures. Greece had already said that its public deficit breached the European Union cap between 2000 and 2003, as the cost of hosting the 2004 summer Olympics reached €7bn. But Greece’s finance ministry had claimed that the country’s 1999 deficit, on the basis of which Greece was allowed to join the euro in 2001, was below the limit. “It has been proven that Greece’s budget deficit never fell below 3 percent since 1999,” finance minister George Alogoskoufis now admits. Katinka Barysch, chief economist at the Centre for European Reform, says the announcement will not be a surprise for Brussels insiders. “Quite a few member states did something similar because of the political imperative to join the euro as soon as possible. Greece has just gone a bit further,” she says. [BBC, 11/15/2004]

Entity Tags: Eurostat, Centre for European Reform, Greece, Katinka Barysch, Giorgos Alogoskoufis

Timeline Tags: Global Economic Crises

The center-right Greek government raises taxes on alcohol and tobacco in an effort to combat the country’s large budget deficit. The price of the cheapest pack of cigarettes will rise from €0.80 to €1.40, whereas taxes on spirits will be raised by 20 percent and the rate on ouzo will go up 10 percent. The changes are announced by Greek Minister of Finance Giorgos Alogoskoufis and will also apply to previously tax-free holiday resorts such as Rhodes. In addition, the main VAT rate will rise from 18 percent to 19 percent. Officials hope the increases will boost public revenues by €500m. The Greek budget deficit is 6.1 percent of GDP, well over the 3 percent permitted by Eurozone rules, and was increased by the massive cost of hosting the 2006 summer Olympics. Together with spending cuts, the government hopes the measures will rein in the deficit to 3.5 percent of GDP this year. According to the Greek government, the tax rises are the only way of avoiding cuts in health and education spending. [Guardian, 3/30/2010]

Entity Tags: Giorgos Alogoskoufis

Timeline Tags: Global Economic Crises

The new Greek government headed by Georgios Papandreou of the Panhellenic Socialist Movement (PASOK) announces a draft budget that will cut the Greek deficit dramatically. According to the draft, the deficit will be cut from 12.7 percent of GDP, although measures to assist the poor will also be implemented. [Reuters, 3/3/2010]

Entity Tags: Georgios Papandreou, Panhellenic Socialist Movement

Timeline Tags: Global Economic Crises


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