Trailing Tsipras govt eyes money from massive primary budget surplus for tax breaks, welfare spending

Wednesday, 24 April 2019 21:54
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A mammoth primary budget surplus - 4.4 percent of GDP for 2018 - combined with two elections next month, the first in Greece since September 2015, will, by all accounts, generate a spending and mild tax-breaks package by the Tsipras government immediately after Orthodox Easter.

According to government circles, who emerged after a high-profile meeting between Greek Prime Minister Alexis Tsipras with his finance minister and alternate finance minister, Euclid Tsakalotos and Giorgos Chouliarakis, respectively, the first "carrot" will be a reinstitution of a tax deduction for taxpayers that pay obligations before deadlines.

Spending measures, mostly of the welfare type for lower socio-economic groups of voters, will be divided into permanent measures and "one-off" bonuses, similar to the "holiday dividend" paid out the last three years before the Christmas holiday.

The "permanent" measures, even if announced and implement, will face possible abolition after the upcoming general election, as Tsipras' hard left SYRIZA party is trailing center-right New Democracy (ND) by high single-digit to double-digit percentage points in all mainstream opinion polls.

While Tsipras has maintained that he'll stay in office "until the very last day possible", which in this case is mid-October 2019, local government and European Parliament elections come in May.

ND leader Kyriakos Mitsotakis has repeatedly signaled his dislike for one-off welfare handouts weaned from the over-achievement of already high creditor-mandated annual primary budget surpluses.

The latest figure of 4.4 percent of GDP in 2018 for the specific fiscal goal, for instance, exceeded the memorandum-mandated target by 0.9 percentage points. While putting smiles on Cabinet members' faces, much of the political opposition, business leaders and economists, in the country and abroad, have warned that it's the product of high taxation and curbed spending in public investments - i.e. a "recipe" for feeble economic growth and recoery in a recession-battered economy.

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