Theodoros Fessas warned of a possible temporary recession.
The government is reportedly preparing a tax relief package ahead of the general election that is set to cost the state up to 4 billion euros per annum, while industrialists are warning of a likely temporary recession for the economy in the case of an extended pre-election period.
Skai TV reported on Wednesday that Prime Minister Alexis Tsipras has asked Finance Minister Euclid Tsakalotos to prepare a package of measures that will include the suspension of the income tax discount reduction, to apply after the election, from January 2020, as well as a number of growth-friendly measures.
They are said to include a reduction in the special consumption tax on fuel, the trimming of the lowest income tax rate from 22 to 20 percent, a drop in the solidarity levy, decreases in value-added tax rates from 24 to 22 percent and from 13 to 12 percent, and the extension of the VAT discount for the eastern Aegean islands beyond June 30.
The package also includes the suspension of the tax-free discount, which amounts to the reduction of the income tax discount; this is also an issue that European Commission Vice President Valdis Dombrovskis addressed in an interview published on Wednesday on the euro2day website. He said the tax discount reduction is “not set in stone” and may not apply after all if the budget meets its targets anyway.
Dombrovskis did warn, however, that the new protection framework for debtors whose primary residence is on the line could undergo “certain corrections” if it does not meet the goal of reducing nonperforming loans.
Against the backdrop of new election handout plans, Hellenic Federation of Enterprises chief Theodoros Fessas on Wednesday stressed the risks that would have on the economy, warning that a protracted pre-election period will lead the economy back into recession for a while. “Consideration and wisdom are required because the loosening of fiscal policy can only generate problems,” he stated.
The head of Greece’s industrialists also expressed concern about last year’s 3-billion-euro drop in investments from 2017, adding that productive investments should become a national target.