Draft budget: Additional tax burden of one billion euros in Greece for 2018

Wednesday, 04 October 2017 15:07

By G. Kouros 

The draft  budget tabled in Greece's Parliament on Monday confirms the imposition of an additional one billion euros in tax burdens for taxpayers and consumers in 2018, the second stage of a "tax tsunami" passed by the current government in 2016 in a bid to meet fiscal targets mandated by institutional creditors.

Of the one billion euros in extra taxes, 402 million euros will come from direct taxes, and the remaining 553 from indirect taxes, as foreseen in the draft budget.

No less than 12 measures are set to come on line as of Jan. 1, 2018, in the wake of a looming shortfall in the revenue target for 2017 by 1.8 billion euros - a development, however, that is not expected to negatively affect the course towards meeting a memorandum-mandated primary budget surplus target for the ongoing year.

The draft budget calls for net revenues in the general budget - on a cash basis - to reach 50.693 billion euros, down 580 million (1.1 percent) from forecasts in the Medium Term Fiscal Strategy (MTFS) for 2018-2021.

The decrease is primarily due to repercussions in 2018 from a predicted decrease in direct tax collection in 2017.

The figure for forecast direct taxes in 2018 is 20.775 billion euros, 678 million euros lower than the previous target.

Revenues include 325 million euros calculated from the last installment of the property taxes for 2017, which is due, however, in January 2018.

Revenues from indirect taxes are budgeted at 27.652 billion euros for 2018, up 150 million euros from the previous target.

Some of the austerity measures set to be implemented next year include the abolition of a tax deductible on medical expenditures, a 50-percent cut in a heating oil subsidy, tacking on short-term real estate leasing income - essentially an "AirBnB tax - on a taxpayer's total annual income bracket, a widely unpopular - in the tourism sector - levy on overnight hotel stays, the harmonization - upwards - of VAT rates on border islands, and even the return of a previously suspended "surplus value" tax on property transactions in Greece's depressed real estate sector, as well as the abolition of an array of welfare benefits.

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