FINANCE

Extra fiscal leeway being sought to fund tax cuts

Additional funds to be found in the 2022 budget to finance further government measures

extra-fiscal-leeway-being-sought-to-fund-tax-cuts

Tax revenues in 2022 will need to increase by more than 4 billion euros compared to this year, while tax rates for individuals and corporations will have to be reduced.

The fiscal space being planned for the purpose of funding the tax reductions of next year, amounting to approximately €1.6 billion, have already been earmarked, according to the government. Now the Finance Ministry wants to find some more fiscal leeway to finance additional tax easing measures for 2022, which under ideal conditions will be announced in the fall ahead of the submission of the 2022 budget in Parliament.

The pandemic’s unpredictable ups and downs may not allow for setting anything in stone just yet, but the priorities have been determined and the plans will soon come out of drawers, depending on developments on the health and general economic fronts.

Therefore, with some €600-700 million of fiscal space available, the freeze of the solidarity levy is going to be extended to civil servants and pensioners, securing an increase to the net takings of the entire population with an annual income over €12,000.

Social security contributions will be able to be reduced by a total of five percentage points in the two-year period at an additional cost of €300-400 million, up from the current reduction rate of four percentage points.

As for the rate reduction of the Single Property Tax (ENFIA) and its supplementary tax for large properties, this is already secured and financed. The increase to the taxable rates of properties, known as objective values, will generate a fiscal space of hundreds of millions of euros – just in Attica the taxable value of properties is going up by 25% or €70-80 million with the addition of more properties in the system. This can be used to finance generous ENFIA cuts and ensure that next year’s property tax slips will be lighter for the great majority of owners.

In total, taxes for 2022 are projected to reach €49.5 billion, against an estimate for €45.53 billion this year.