ECONOMY

Draft budget provides for more taxes

More taxes and less spending is the recipe according to the first draft of the 2014 budget that will be tabled in Parliament on Monday and which has been seen by Kathimerini.

Primary expenditure will be reduced by 3.2 billion euros, while revenues are expected to grow by 1.5 billion euros after the multiple interventions in income tax and the new property tax. The reduction in spending will be contingent on the drop in funds used for salaries, pensions, social security, healthcare, public investment and consumer expenditure.

Based on the above, the primary surplus will next year amount to 2.8 billion euros, from 300 million euros this year, while the fiscal deficit will remain below 3 percent of gross domestic product.

The thorny aspect of the 2014 budget remains the additional austerity measures that will be required. The government is contemplating additional targeted interventions amounting to 500-700 million euros that the social security funds will require, but the country’s creditors are demanding new measures totaling 2 billion euros. Given that this front remains open, it is certain the draft budget will be revised considerably before the submission of the final text at the end of November.

The first draft will include the Greek estimates that will almost certainly constitute the basis for the negotiations with the inspectors of the creditors, after which the final estimates will be included in the budget’s text. It must be noted that no draft has survived intact for more than one month.

The only fiscal figure that will probably not change is the primary surplus, which will amount to 1.5 percent of GDP, as this is the level required to secure the sustainability of the Greek debt.

The first draft contains the estimate for a 4 percent contraction for the whole of 2013, with next year becoming the first to record growth after six years of contraction. GDP will expand by an estimated 0.6 percent.

Revenues will have a slightly lower target than this year, at 45.1 billion euros, although taxpayers will have to pay 1.5 billion euros more. Spending on salaries and pensions will continue to shrink, reaching 41.4 billion euros, with the biggest cut expected in social security and healthcare, equal to 2.2 billion euros.