Troika dismisses tax arrears law

Country’s lenders say legislation granting up to 100 installments does not have approval, would cost 1 bln

Just a day after securing the Eurogroup’s approval for a precautionary credit line to exit the Greek bailout at the end of the year, the government has encountered a new problem with the troika, which has taken exception to a new law increasing the number of installments in which taxpayers can pay off their debts to the state.

Kathimerini understands that the troika has written to the government to ask for the measures to be withdrawn as they did not have the prior approval of the country’s lenders before being submitted to Parliament. The law, which allows taxpayers up to 100 installments in which to pay off their dues, was passed by MPs last month.

The coalition had hailed the legislation as a move to lighten the burden on beleaguered taxpayers and believes that withdrawing it now would be far too politically damaging. It also disagrees with the troika’s assessment that the new measures, which include discounts on penalties and interest, would add around 1 billion euros to the fiscal gap, which had previously been estimated at some 1.5 billion by Greece’s lenders.

The government disagrees with this evaluation and believes that the numbers are much smaller. The State General Accounting Office has been ordered to go over the figures again so Greece can respond to the troika’s objections.

According to coalition sources, the International Monetary Fund believes that regardless of what impact the new measures have, the fiscal gap will be around 2 billion euros and the government will not be able to cover it with new cost-cutting measures. It has therefore recommended to the coalition that the target of a primary surplus of 4.5 percent of gross domestic product be moved back a couple of years from the current goal of 2016.

Athens is skeptical about such a move because it believes that the troika would ask for new structural reforms in return and the government does not want to commit to new actions with the possibility of early elections looming.

Eurozone finance ministers agreed on Thursda that should the current troika review be completed by the December 8 Eurogroup, Greece would be granted precautionary support under the European Stability Mechanism’s Enhanced Conditions Credit Line (ECCL) for up to a year. This, however, would require the government to sign a new memorandum of understanding.