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New Greek leader unveils plans to revive economy and cut taxes

Athens

GREEK Prime Minister Kyriakos Mitsotakis is moving into policy implementation mode, starting with plans to revive the economy and cut taxes.

Lawmakers will vote late on Monday on a procedural confidence motion in the new government after a debate that started on Saturday. At the outset, Mr Mitsotakis presented his four-year economic agenda in his first plenary speech to parliament since winning national elections on July 7.

Greece's 2020 budget will show the country's "fiscal balance isn't disrupted nor are the primary surplus targets of the previous government", Mr Mitsotakis said. By achieving the targets for this year and next, the government will have the ability to lower the primary surplus level in the coming years "to a more realistic level", he said.

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The premier's priority is a reform of Greece's complex tax system to create a more pro-business environment, necessary for attracting investment to boost the economy's recovery. Mr Mitsotakis wants to make good on election pledges to alleviate the tax burden for crisis-weary Greeks, specifically for the middle classes who were targeted the most by the previous administration.

While Greece's creditors are generally supportive of the proposed tax changes, they want him to make sure that agreed fiscal targets won't be endangered. Greece should make growth its top priority while at the same time maintaining the agreed primary surplus, ESM managing director Klaus Regling said in Athens last week.

German Chancellor Angela Merkel said on Friday she is "convinced" that Mr Mitsotakis's programme "will bring with it good chances for more growth, and a strengthening of impulses for growth in Greece". Mr Mitsotakis said he will introduce legislation as soon as this week to reduce the so-called Enfia property tax by as much as 30 per cent, according to the value of properties. Other measures, including cutting business taxes, will be introduced later.

The government plans to reduce the corporate tax rate to 20 per cent in two phases. The first step, in September, will cut the rate to 24 per cent from 28 per cent in 2019 and to 20 per cent in 2020. The tax on dividend payments will be slashed by half to 5 per cent, while payment of property gains tax and the sales tax for building work will be suspended for the time being.

Mr Mitsotakis said his government will seek a strategic investor for the country's ailing state-run electricity provider Public Power Corporation SA and to kickstart stalled projects, starting with Hellinikon.

The flagship investment envisages the transformation of a former airport site on the Athens riviera - more than twice as big as New York's Central Park - into a metropolitan park including luxury hotels, a casino resort, marinas and apartments. The investment "will start immediately and will be a symbol of the new Greece", Mr Mitsotakis said.

Also planned is the privatisation of Hellenic Petroleum SA and the sale of a 30 per cent stake in Athens Airport, he said. BLOOMBERG