Plan B to avoid au­to­matic cuts

Fi­nance Min­istry pon­ders im­ple­ment­ing fu­ture mea­sures ear­lier if rev­enues seem set to miss their tar­gets

Kathimerini English - - Front Page - BY PROKOPIS HATZINIKOLAOU

The Fi­nance Min­istryis pre­par­ing an al­ter­na­tive plan to tackle any prob­lems in the im­ple­men­ta­tion of this year’s bud­get that might trig­ger the au­to­matic fis­cal ad­just­ment mech­a­nism.

This Plan B pro­vides for in­tro­duc­ing cer­tain tax mea­sures at ear­lier dates than orig­i­nally sched­uled – such as the abo­li­tion of tax ex­emp- tions and rais­ing the tax on fuel – and re­view­ing pub­lic sec­tor ex­pen­di­ture.

Depend­ing on how much comes into the state cof­fers, the min­istry will de­cide which taxes should be im­ple­mented ear­lier – i.e. in Oc­to­ber 2016 in­stead of the com­ing years. Although the min­istry was happy with the bud­get data from the first five months of the year, fears have been ex­pressed re­gard­ing the level of tak­ings from tax­pay­ers based on the sig- nif­i­cant re­duc­tion in salar­ies and pen­sions. The first in­come tax in­stall­ment is due at the end of July, while the first Sin­gle Prop­erty Tax (ENFIA) pay­ment is sup­posed to be paid in Septem­ber.

Min­istry of­fi­cials es­ti­mate that the tax and la­bor mea­sures set to ap­ply from the se­cond half of this year will cre­ate ma­jor prob­lems in the econ­omy and there­fore to the state bud­get. They be­lieve that non­per­form­ing loans will ex­pand fur­ther and con- sump­tion tax rev­enues will shrink as a re­sult of the new value-added tax rate and the drop in dis­pos­able in­comes.

Among the emer­gency mea­sures cur­rently be­ing ex­am­ined is bring­ing for­ward the fuel tax hike from Jan­uary 1, 2017 to Oc­to­ber 1, 2016. The in­crease will ap­ply to the spe­cial con­sump­tion tax on un­leaded gaso­line, diesel and gas.

In or­der to cre­ate a safety cush­ion, the gov­ern­ment is start­ing a pi­lot 1.1135 pro­gram for cut­ting costs at three min­istries, with sav­ings rang­ing from 5 to 20 per­cent. The pro­gram will start at the min­istries of Econ­omy, Fi­nance and Cul­ture, and will also con­cern the en­ti­ties they su­per­vise.

A gov­ern­ment of­fi­cial who is in close con­tact with the coun­try’s cred­i­tors says that out of the 70 bil­lion euros of gen­eral gov­ern­ment ex­pen­di­ture, a sig­nif­i­cant amount could be saved through a spend­ing re­view.

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