Austerity goes on with new cuts from 2019
The Eurogroup decision on Friday confirms that austerity will continue for the coming years in Greece, with tough measures including the pension cuts in 2019 and the tax discount reduction in 2020. The austerity measures for the next couple of years will amount to 5 billion euros.
At the same time, the European Commission is blocking the distribution of the primary surplus overrun unless it provides its consent. In fact Brussels estimates that those overruns will be 50 percent below what the government has forecast for the 2019-22 period.
The pension cuts will bring a fiscal benefit of 2.9 billion euros, while the so-called countermeasures – aimed at offsetting the blow – will not make up for the reductions inflicted on hundreds of thousands of retirees, while the tax discount reduction will mean an additional load of 650 euros per taxpayer per year on average.
If the fiscal targets are met, then the countermeasures will be activated, reducing the lowest income tax rate from 22 to 20 percent and exempting those earning up to 30,000 euros per year from the solidarity levy in 2020.
