New taxes of 2.5 bln next year
Stronger-than-expected effect of fiscal measures has not convinced creditors to ease burden on taxpayers
The final draftof the 2017 state budget, tabled yesterday in Parliament, provides for new measures worth 3.3 billion euros. The Finance Ministry foresees the new measures, combined with the better-than-expected performance of those imposed this year, leading to a primary surplus of 2 percent of the gross domestic product in 2017, against a bailout agreement target of 1.75 percent.
Despite the expectation that the fiscal milestone will be covered, the government has failed to persuade its creditors not to force it to implement the measures agreed (in order to ease the fiscal pressure on taxpayers), as the budget to be voted on December 10 shows.
Greeks will have to pay additional taxes of 2.5 billion euros in 2017, coming both from the increase in income tax rates and from indirect taxation on tobacco, coffee, fuel, the internet, pay TV etc. The state will also have an additional benefit of 843 million euros from slashing expenditure on pensions and social benefits and raising social security contributions.
On the other hand, the budget includes social policy actions worth 871 million euros: This concerns 571 million to finance the Solidarity Social Income and another 300 million whose precise spending is not specified.
The primary surplus projected amounts to 3.6 billion euros, against a target for 3.1 billion, thanks to the better-than-expected performance of this year’s measures, which has led the government to expect this year’s primary surplus to close at 1.9 billion euros, or 1.1 percent of GDP.
The final draft, debate on which will start in the House on December 6, contains a growth forecast of 2.7 percent for next year, against a 0.3 percent contraction this year. This 1.0631 is based on the forecast for increases of 9.1 percent in investments, 1.8 percent in private consumption and 5.3 percent in exports – all of which are seen by various observers and entities as quite optimistic.
The budget also includes an estimate for a return to inflation, at an annual rate of 0.6 percent, following years of deflation, and a reduction of the unemployment rate to 22.6 percent from 23.7 percent this year.