The primary surplus of the state budget has exceeded the initial target by more than four times, reinforcing the estimates of the economic staff that the fiscal performance of the economy will also move at record levels.
Based on the positive figures, the Ministry of National Economy is already preparing tax cuts for the middle class, economic aid for vulnerable groups, as well as measures to address the housing crisis.
Prime Minister Kyriakos Mitsotakis is expected to make the announcements at the Thessaloniki International Fair (TIF) in September while the measures will be finalized in August. Following the approval of the escape clause in the Eurogroup, the plans for the TIF package concern interventions with a fiscal cost of 1.5 billion euros.
A primary surplus of 5.343 billion euros was recorded in January-May, more than four times the target of 1.055 billion euros that had been set. This development is attributed to the overperformance of tax revenues due to measures to reduce tax evasion and the strong growth performance of the economy. These two factors are expected to maintain their momentum in the coming period, which creates reasonable expectations in the economic staff that this year the primary budget surplus will exceed 10 billion euros. This means that the updated target for a surplus of 3.2% of GDP will be exceeded, reaching new higher levels of 4%. After all, last year, despite the modest initial budget targets, the primary surplus skyrocketed to 11.4 billion euros, an amount equivalent to 4.8% of GDP.
What will the TIF package include?
As the government has already announced, the TIF package will include new tax cuts for the middle class and salaried workers, economic aid for the vulnerable and interventions for the housing problem. Specifically, the measures on the table for discussion include:
Tax cuts for middle income earners.
Tax relief for families with children to support families, while the scenarios also include an increase in the tax-free threshold.
Reduction of the tax burden on rental income, along with incentives for owners to put their vacant homes on the market.
Economic aid for tenants to help them cope with the high cost of rent.
Arrangement to unblock urban planning and put 35,000 properties currently in the portfolios of banks and servicers on the market for sale.
