Greece will have to cut spending as tax rates peak, says central bank

GREECE’S effort to cut deficits must rely on curbing spending, tax evasion and waste as there is no more room for higher taxes, the country’s central bank said in an interim monetary policy report yesterday.

“There is no more room to raise tax rates on businesses and individuals and the spearhead of policy to boost revenues must aim for a widening of the tax base and capturing tax evasion,” the central bank’s report said.

Greece is aiming to cut its budget shortfall to 7.8 per cent of gross domestic product (GDP) this year from 13.8 per cent in 2009, a deficit that is expected to be revised upwards by the EU’s statistics body Eurostat.

The overborrowed country must meet ambitious fiscal adjustment targets to keep receiving emergency funding under a €110bn IMF package.