BUSINESS

Athens eyes tax breaks to offset new measures

TAGS: Taxation, Finance

Having accepted that it will have to legislate new measures in order to conclude the bailout review, the government is hoping to also pass some tax breaks to counterbalance the impact.

Kathimerini understands that the coalition would like to lower value-added tax on Greek islands and social security contributions for small- and medium-sized enterprises to cushion the impact of any new fiscal measures it may choose to adopt.

The government seems prepared to lower the tax-free threshold for incomes from 2018 or 2019 to reach a compromise with the institutions, allowing the review to be wrapped up.

The coalition wants to avoid legislating any further cuts to pensions but may be willing to tag them to the fiscal mechanism that would be triggered if the primary surplus targets are not met after 2018.

Athens has also rejected the idea of increasing the limit for collective dismissals – one of the labor reforms promoted by the creditors – as it believes that this would not get the necessary support from government MPs.

The final element in being able to reach an agreement that will overcome the current impasse is the detailing of medium-term debt relief measures by the eurozone.

According to sources, the Finance Ministry has tabled a proposal that would lead to the average weighted maturity of Greece’s bailout loans being extended by 10 years.

This would mean that Athens would only have to hit 3.5 percent of GDP primary surplus targets for three years after 2018, rather than the 10 years foreseen under the European lenders’ forecasts.

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