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The stock market in the European Union crashed last week to a new low after a Greek government official said it would impose a two-year tax on shares traded by foreigners and Greek businesses.
The Greek government on Thursday also announced that it would require all companies to set up foreign-owned branches and pay a tax of 25 percent on their earnings, which it said was needed to help fund social welfare.
The tax will apply to foreign-invested companies with less than 50 employees, and to the owners of Greek businesses that have more than 50.
The government has been in the middle of a debate over whether to impose a levy on Greek shares since the start of last year, when its finance minister, Euclid Tsakalotos, said he wanted to bring the levy down to 25 percent from 35 percent.
Greece’s stock market has been one of the worst performers in Europe over the past year, with the Greek government issuing a warning in June that the market was on a “dangerous path.”
The Athens stock market was up more than 10 percent last year and had more than doubled since 2009.
In recent days, Athens has sought to contain the market’s slide with measures such as imposing a 50-percent tax on foreign-backed companies that buy Greek stocks, and requiring all companies with more than 25 employees to set-up foreign-controlled branches.
Tsakaloto’s comments on Wednesday came a day after Greece imposed a tax on the sale of shares in foreign companies to raise money to repay the country’s debt.
Greek Prime Minister Antonis Samaras, in a speech to the nation on Thursday, said the tax would not raise the countrys gross domestic product, but would instead “support the social welfare and stability of the country.”
He also promised that the tax, which would be imposed in July, would “provide some breathing space” to companies.
Greek Finance Minister Euclid Touziori has said he will introduce a new levy on foreign investors.
The tax would also be paid by foreign-owners of Greek-owned businesses, he added.
Tsakarys comments come amid rising speculation that Greece could impose a new tax on stock trades and the imposition of a “bail-in” on foreign firms.
Tsaka said the government is seeking a two percent levy on shares owned by foreign nationals and would also impose a surcharge of 15 percent on foreign ownership of Greek firms, with an extra 15 percent levy for firms that do not have more employees than 50 and for foreign investors holding more than one million euros.
The Greek finance minister said the levy would be “very important for the country to help us to deal with the financial crisis,” as well as the country “to deal with its own problems.”
Greeces stock market plunged on June 6 after Tsakayos announcement.
The market has since recovered but has been trading below its previous all-time low of $14.20, which was set on Sept. 3, 2013, before the financial and political crisis of 2009 hit the country.