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By Lefteris Papadimas and George Georgiopoulos

ATHENS, Nov 3 (Reuters) - Greece's new socialist government will slap
a one off-tax on businesses to fund one billion euros worth of cash
support to low-income earners, the finance minister said on Tuesday.

Wrestling with an economy on the verge of recession and a budget
deficit that has swollen to 12.5 percent of GDP, the government wants
to help low-income households by redistributing income from deeper
pockets, without adding to fiscal woes.

The announcement of the tax and benefits package coincided with the
European Commission's declaration that it is opening a new stage in
disciplinary action against Athens over fiscal laxity.

Greece's one-off tax will apply on 2008 pre-tax earnings and range
from 5 to 10 percent. It will be coupled with higher taxes on
individuals with large real estate holdings, meaning property worth
more than 600,000 euros will face higher rates.

'It is the first measure of support for family budgets and low
incomes. It will be complemented by household debt relief and other
bills to support the unemployed and businesses,' Finance Minister
George Papaconstantinou told reporters.

'No government likes to take one-off measures, but the situation is
very difficult,' Papaconstantinou said after a cabinet meeting
delivered on an Oct. 4 election campaign pledge to help low earners.

'Given the extremely difficult fiscal situation, it would not be
responsible to make such an intervention (the social support measures)
by widening the deficit,' the minister added.

Greece has been running budget deficits above the EU's ceiling of 3
percent of gross domestic product in 2007 and 2008, and in October
more than doubled its deficit forecast for this year to 12.5 percent
-- the highest in the 27-nation bloc.

Greece raised 7.0 billion euros ($10.2 billion) from a benchmark
15-year bond issue on Tuesday, covering most of an extra 8 billion
euros the country's debt management agency (PDMA) said Greece would
need this year.

The European Commission said on Tuesday it sees Greece becoming the
euro zone's most indebted country next year, reaching 124.9 percent of
GDP.

EU DEFICIT PROCEDURE

EU Economic and Monetary Affairs Commissioner Joaquin Almunia said it
was obvious the previous conservative government had failed to take
effective action in past months to correct Greece's fiscal slippage.

'So we will be obliged to go to the next step of the (excessive)
deficit procedure. Our first procedure will be presented next week,'
Almunia told a news conference in Brussels.

This will open the way for EU finance ministers, probably in December,
to adopt the Commission recommendation which is the last step before
sanctions.

The bloc's finance ministers asked Greece in April to bring the
deficit below 3 percent in 2010. The disciplinary procedure will
involve setting a new deadline for Athens to cut the deficit.

Under the Greek tax plan, about 140 businesses with pre-tax earnings
of 5 to 10 million euros would face a 5 percent tax. Another 85 firms
with profits of 10 to 25 million would be taxed at 7 percent. Firms
with earnings of more than 25 million euros will be taxed at 10
percent.

'Some 300 companies and banks in the last 5 years benefited from a
reduction in tax rates. Now is the moment to participate in social
solidarity,' Papaconstantinou said.

Greek shares were unchanged on the news but down 2.35 pct on the day
in what analysts said was anticipation of the announcement as well as
following the overall trend in European markets.

'The government will use proceeds from the one-off tax to finance the
support to low incomes without burdening the budget,' said economist
Nikos Magginas at National Bank.

'The market has been discounting the extraordinary tax measure. We are
awaiting the 2010 budget to see the additional measures that will
bring about a reduction of the deficit.'

The 1.0 billion euros of support will relieve about 2.5 million
low-income individuals, the minister said. Most of it -- close to 900
million euros -- will come from the corporate tax and the rest from
the higher levies on individual real estate holdings.

(Additional reporting by Jan Strupczewski in Brussels; writing by
George Georgiopoulos; editing by Ingrid Melander and Stephen Nisbet)
($1=.6835 Euro) Keywords: GREECE TAX/

(george.georgiopou...@reuters.com; +30210 3311813; Reuters
Messaging:george.georgiopoulos.reuters....@reuters.net)

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