Greek government mulling pre-election tax cuts

Greek government mulling pre-election tax cuts

The Greek government is contemplating the adoption of a series of tax cuts and social measures ahead of the European and local elections at the end of May.

In its effort to close the gap main opposition New Democracy has opened in latest opinion polls, the government will seek to implement an extensive package of measures that it hopes will boost ruling SYRIZA in upcoming elections.

The government’s intentions were put to a Euro Working Group (EWG) meeting on Thursday, where Alternate Finance Minister Giorgos Houliarakis gave details of the measures being examined, worth about 1 billion euros. Athens also presented a Stability Program to Brussels which forecasts 5.5 billion euros in primary surpluses will be generated by the Greek economy over the next four years.

European officials reportedly appear concerned that the handouts are being funded by cuts to Greece’s public investment program, while government officials argue that it will be using the primary surplus excess to fund its plans. The government projects 1.1 billion euro fiscal space will be created from the 2019 targets being exceeded.

Earlier this week, Finance Minister Euclid Tsakalotos spoke of the need to reduce excessive taxes, while at the same time promising a “redistribution of income”.

The set of measures that are currently on the table include legislation allowing repayment of debt to the State in 120 installments; lowering the VAT rate; the distribution of a one-off wage/pension bonus payment; and a reduction of tax on property ownership.

Meanwhile, positive news came out of Greece’s economy on Thursday as the European Financial Stability Facility (EFSF) approved debt relief measures totaling almost one billion euros. European Stability Mechanism (ESM) chief, Klaus Regling, said the decision shows “the Greek government is abiding by its reform commitments”.

Moreover, Thursday’s EWG meeting approved a request by Athens to repay a portion of the bailout loans it has received from the International Monetary Fund (IMF) earlier. The early repayment concern 3.7 billion euros in IMF loans at a 5.13 percent interest rate./ibna