Prime Minister Kyriakos Mitsotakis will announce a package of measures on Saturday aimed at easing the pressure on middle and low income earners from the increase in retail prices – particularly in energy – while also sending the message that the government’s reform policy and tax breaks will continue.
Armed with the significant increase in gross domestic product in the April-June period (16.2% year-on-year), the government will be able to revise its forecast for the whole of the year by at least one percentage point above its official forecast for a 3.6% expansion.
As each percentage point of growth amounts to additional state revenues of 600 million euros, Finance Ministry officials note, the margin for new handouts could reach up to €900 million if the government estimate comes close to what the Bank of Greece is now expected to forecast – i.e. growth of 5% this year.
The package that will be announced at the Thessaloniki International Fair was discussed at a meeting on Monday under the prime minister, where all proposed measures and their costs were put on the table.
The issue of price hikes was recently added to the government’s concerns, as power price increases are now expected to come up to 50%. The government will try to intervene to reduce the impact on consumers, but this will not be through tax cuts – instead it will opt for subsidies.
The government is also considering maintaining the reduced value-added tax rate of 13% on coffee, public transport, events tickets and tourism services.
On the tax front, the pending issue that must close in 2022 is the further reduction of the Single Property Tax (ENFIA) by 8%, as a sign that the government is fulfilling its pledges and supporting property owners.
Mitsotakis will also announce tax breaks and other incentives for mergers and acquisitions, as this forms part of the “Greece 2.0” recovery blueprint aimed at making companies larger and more export-minded.
Still, any measures for 2022 will need to be of a temporary character, as the EU fiscal rules will return in 2023.