By T. Tsiros
[email protected]
The issue of whether or not an already pre-legislated measure to lower the annual tax-free income threshold will be implemented on Jan. 1, 2020 will be determined after general elections this year, as October is the last month in which the currently poll-trailing Tsipras government can stay in power with the current Parliament composition.
As such, any new Greek government to emerge, either in October or earlier, if snap elections are held, will ratify the 2020 state budget in November 2019, whereby the measure will either be included in calculating the budget, or it will be avoided.
The hard left government in Athens has already avoided one particularly painful austerity measure that was set to be implemented on Jan. 1, 2019, namely, a harmonization of social security benefits downwards. The measure, part of another round of tax hikes and spending cuts decided in 2016 in order to meet ambitious fiscal targets mandated by European creditors, would have applied post-2016 pension reforms to beneficiaries who retired before that year.
Athens’ argument, that it was not only meeting but exceeding primary budget surplus targets, as a percentage of GDP, apparently changed European creditors’ minds, in terms of the 2019 pension cuts.
In a related development on Monday, Eurogroup head Mario Centeno was quoted by the pro-government daily “Ethnos” as saying that the looming 2020 austerity measure must be “closely scrutinized” in light of the Greek state meeting fiscal targets. While flatly ruling out any easing of the high primary budget surplus target (3.5 percent annual until 2022), Centeno nevertheless left open a “window of opportunity” that the measure will be reconsidered.
His comment came after Greek FinMin Euclid Tsakalotos on Friday again committed, at the Eurogroup venue no less, that the Tsipras government will “expand the tax base”, a euphemism for lowering the annual tax-free income tax threshold.
What appears certain is that talks over the austerity measure will commence before general elections in Greece, regardless of the result to emerge from the ballot box.
On the official calendar, Greece’s 2020 draft budget will be discussed as part of negotiations, between Athens and its institutional creditors, for the third post-bailout review that is due in May 2019.
