Galery

1

An increasing number of publications in foreign media that refer to sources from the government headquarters  indicate that Athens will not be able to avoid those measures that are considered as unthinkable today.

They are the following: an increase in VAT and excise duties, intervention in the insurance system and targeted privatizations.

While Alexis Tsipras was meeting with Angela Merkel, Reuters quoted the statements of European leaders, according to whom the new Greek government will be unlikely to escape the commitments made by the government of Samaras, as they are considered more or less a starting point in the negotiations and for the signing of a possible new contract. Similar are the statements of sources from the Greek Ministry of Finance to the German Press Agency dpa, who believe that in addition to the initiatives to combat tax evasion and corruption the reforms prepared by Athens may include measures that were previously perceived as taboo. In fact, the issue is to find measures that will sound good to the partners but will not contradict the programme declaration and the main promises of the government.

With regard to VAT, it seems that the proposal to abolish the reduced rates imposed on the rich islands in the Aegean Sea remains on the table, and the next stage will be to review the basic rates. It should be noted, however, that different opinions on the VAT issue could be heard in the government, as many argue that any interference in rates or in exemptions leads to an increase in the tax burden and to a recession.

Such disagreement seems to exist on the new property tax as well. In particular, there are attempts to find financial limits for the tax, which will be in force this year, so that its tax burden is lower than that of the current single property tax. The situation is further complicated by the impending correction of tax assessments, as it will reduce the taxable value of real estate. In all cases, effective equivalents are being sought for, in view of the fact that the proceeds from the single tax on real estate amount to 2.6 billion euro at present. On the other hand, there are opinions according to which the abolition of the single tax on real estate is a major campaign and programme commitment and therefore the government cannot make concessions, especially at a time when the goal of attaining a primary surplus is not so binding.

The proposals for targeted increases in excise duties on tobacco and alcohol seem to be gaining supporters again and all exceptions and exemptions that cost the budget about 1 billion euro will be reconsidered. The counterargument is that the increase in indirect taxes leads to increased smuggling and, therefore, in order for such measures to have a financial effect they must go along with effective measures against illegal trade.

The real problem, however, is the social security system, as no further reduction of basic pensions is being discussed, on which the representatives of the lenders insisted in the protracted negotiations with the previous government. For the time being, the Greek government is determined to put an end to early retirement with powerful disincentives that will drive all citizens who are planning to retire early to abandon their intention and at the same time, it will start the administrative unification of funds.

As for the public sector, the aim is to apply the single payroll table on a mass scale and to rationalize it, as even today employees with the same qualities and competencies receive different wages.