Prime Minister Alexis Tsipras announced on Saturday his plans to lower the value added tax (VAT) and the property levy ENFIA as of 2021 and 2019 respectively in a speech at the 2018 Thessaloniki International Fair, aimed at signalling a new era for Greece after the end of the third bailout.
“Greece today is a different country. A country that, after a clean exit from the memorandums, is standing on its feet again, relies on its own strengths and can look forward to the future with confidence,” he told attendees.
"We are determined to fulfil the agreed [fiscal] targets in the coming years. We will not allow Greece to return to the era of deficits and fiscal derailment."
Presenting the government’s political strategy for the next four years, he said it includes a reduction of the higher VAT from 24 pct to 22 pct and the lower from 13 pct to 12 pct, that will take effect as of January 2021.
The government will also pass law by the end of the year gradually reducing the property levy ENFIA by up to 50 pct for lower-income households. The measure will be completed in two phases: the first in January 2019 and the second in January 2020.
Tsipras also pledged to lower the social security contributions for the self-employed and farmers by up to 35 pct as of next year.
By exceeding its target for a primary surplus, the government believes it has the opportunity to strengthen the three pillars which it considers as the main priorities for the post-bailout period: fair growth, the welfare state and boosting employment.
Commenting on the much-contested planned pension cuts that the government hopes to avoid implementing in January 2019, the prime minister said he is “certain” the target for a 3.5 percent primary surplus can be achieved without slashing pensions further.
He said the government will wait for the statistics data to verify the surplus and then it will present its point to the country’s European partners when Greece submits its 2019 budget in October.