BUSINESS

Multi-bill brings new austerity measures worth 4.9 billion euros

EIRINI CHRYSOLORA

TAGS: Finance

The multi-bill that includes the new midterm fiscal plan and which MPs started debating on Monday in Parliament includes a heavy package of austerity measures amounting to 4.9 billion euros. This is necessary for Greece to collect the bailout installment of 7 billion euros in time to make a debt repayment in July.

The multi-bill contains cuts to main and supplementary pensions by up to 18 percent from 2019 and income tax hikes of up to 650 euros per taxpayer as of 2020, as well as new hikes to social security contributions for freelance workers and tax exemption abolitions from next year.

The pension cuts will save the state a total of 2.7 billion euros by 2021, while the reduction in the tax discount will fetch an extra 2.06 billion. The rise in contributions and the cuts to allowances will add another 143 million euros.

The main measures to be inflicted on taxpayers are the loss of two monthly pensions as of 2019 for those on relatively high pensions, plus another 650 euros per year through the tax discount reduction. Taxpayers will also lose the tax discount determined by their medical expenses and the 1.5 percent discount on tax withheld from their salaries and pensions.

The government is trying to hide this wave of fresh austerity measures under the promise of the so-called countermeasures that could run to 7.5 billion euros up to 2021. But their implementation will depend on the amount of the primary surplus on top of 3.5 percent of each year’s gross domestic product. Therefore, for the government to be able to realize countermeasures worth 1 percent of GDP it must attain a primary surplus of 4.5 percent of GDP.

Strangely enough, the multi-bill also includes structural tax interventions worth 3.5 billion euros among the countermeasures, but they are not defined at all.

Online