Greek PM unveils tax cuts as bailout ends

Greek Prime Minister Alexis Tsipras yesterday unveiled plans for tax cuts and pledged spending to heal years of painful austerity, less than a month after Greece emerged from a bailout programme financed by its EU partners and the IMF.

Tsipras, who faces elections in about a year’s time, used a keynote policy speech in the northern city of Thessaloniki to announce a spending spree that he said would help fix the ills of years of belt-tightening, and help boost growth.

But he said Athens was also committed to sticking to the fiscal targets and reforms promised to its lenders.

Greece has agreed to maintain an annual primary budget surplus — which excludes debt servicing costs — of 3.5 per cent of gross domestic product up to 2022. So far, it has outperformed on fiscal goals and the economy has returned to growth.

“We will not allow Greece to revert to the era of deficits and fiscal derailment,” he said.

He said would beat its primary surplus target again this year and, following a debt relief deal in June, he could “safely plan its postbailout future”. Government officials have put this year’s fiscal room at €800 million (Dh3.39 billion).

Corporate tax reduction

Tsipras promised a phased reduction of corporate tax to 25 per cent from 29 per cent from next year, as well as an average 30 per cent reduction in annual property tax on homeowners. He promised to reduce the main value added tax rate by two points to 22 per cent from 2021. But he added that Greece could achieve its primary budget surplus targets without implementing further pension cuts.

“Today I can look in your eyes and tell each one of you that your insistence and your patience have borne fruit,” he said, referring to the eight years of reforms.