By T. Tsiros
[email protected]
The “cost” from the latest round of austerity measures and tax hikes in Greece reaches 5.396 billion euros over the 2018-2021 period, as calculated from provisions included in a draft omnibus bill tabled in Parliament late Saturday evening.
The figure, if added to the measures passed in the third memorandum negotiated and submitted to Parliament by the Tsipras government in August 2015, reaches 14.048 billion euros.
The draft legislation, based on what is termed a “supplementary memorandum”, more-or-less includes 140 “prior actions” demanded by creditors from the leftist-rightist coalition government in order to ensure that the Greek state meets ambitious fiscal targets until 2021, or by other accounts, 2022. Based on the tables included in a Medium-Term Fiscal Strategy (MTFS) report, which accompanies the draft legislation, the value of pension and welfare cuts for 2018 reaches 570 million euros; 3.102 billion euros in 2019; 5.116 billion euros in 2020 and 5.396 billion euros in 2021.
The MTFS also cites countervailing measures, what the government calls “positive measures”, mainly higher welfare spending, which will only be activated if fiscal targets (primary budget surpluses as a percentage of GDP) are achieved, and in tandem with creditors’ agreement.
These conditional “positive measures” are valued at 7.559 billion euros over the 2019-21 period, of which 3.5 billion euros refer to unspecified “structural tax interventions”.
The primary changes in the country’s tax regime, as detailed in the draft legislation, include:
– a reduction of the tax-free annual income threshold, which for some castes of wage-earners and pensioners – earning less than roughly 6,000 euros a year – can reach up to 650 euros in extra taxes
– abolition of certain tax breaks for wage-earners, pensioners and even Parliament MPs, a measure forecast to generate 233 million euros in revenues for state coffers in 2018
– abolition of a heating oil subsidy for low-income households by 50 percent, which translates into 58 million euros in state budget savings for 2018
– taxes ranging from 15 percent to 45 for short-term leasing of lodgings, essentially an “Airbnb tax”
– more and extensive tax audits beginning in 2018
– abolition of a so-called “solidarity tax” on annual income of less than 30K euros as of 2020, and a lower rate for incomes above that figure
– a reduction, by 2 percentage points, of the highest income tax rate for individual taxpayers, from 22 percent to 20 percent, but as of 2020
– a reduction, as of 2020, of the corporate tax rate, from 29 to 26 percent
– A reduction in the VAT rate for agricultural sector supplies, from 24 to 13 percent, as of July 1, 2017.
