By Dimitris Hatzidimitriou & Thanos Tsiros
Greek taxpayers will be called upon to fork out – or lose out – on 4.1 billion euros out of the total 5.4-billion-euro tax and pension cut package within the next 18 months.
Publication in the government gazette of last weekend’s approved bills raising taxes and reforming the pension system towards the direction of reducing state outlays for the social security system is followed by the expected, within days, submission to parliament of another draft bill increasing various indirect taxes.
The measures aim to cover the 5.4 billion-euro figure, of which 1.3 billion euros must be collected within the next six months. The leftist government believes that if it successfully implements the latest austerity package, no new measures will be necessary to achieve memorandum-mandated fiscal targets through 2018.
All of the austerity measures are set to be implemented until the end of the first half of 2017, with taxpayers and pensioners projected to cover 4.1 billion euros of the total by that time.
As far as 2018 is concerned, beyond the 1.3 billion euros in extra austerity measures projected to be collected that year, the government faces its biggest challenge in achieving a 3.5-percent primary budget surplus. Otherwise, an automatic spending cuts mechanism will kick in, something that the current government acquiesced to during Tuesday’s Eurogroup meeting. The only consolation is the fact that creditors have not pressed – so far — for the mechanism to be included in a bill sent to Parliament or that spending cuts must be specified beforehand.
One bright spot amid the coming “tax-and-cut” raid is the existence of a clause allowing the government to exempt expenses it incurs from dealing with the migrant / refugee crisis from calculation of the primary budget surplus. EU transfers of cash to deal with the crisis will not credited to Greek state coffers.
