Greece’s institutional creditors are reportedly demanding that the tax-free ceiling for wage-earners and pensioners in the country be dramatically slashed from its current rate of 9,545 euros in yearly income.
By Panos Kakouris
Greece’s institutional creditors are reportedly demanding that the tax-free ceiling for wage-earners and pensioners in the country be dramatically slashed from its current rate of 9,545 euros in yearly income.
The development comes amid delays in completing the first review of the “Greek program”, i.e. an evaluation of the Greek government’s fulfilment of conditions included in the third memorandum.
The latest demand by creditors is linked to talks on how to cover the 2016 fiscal gap. Institutional creditors (EU Commission, ECB, IMF, SSM) themselves apparently cannot agree on the size of the gap or even on the measures needed, although the IMF is reportedly adopting the strictest position. The IMF has calculated that the Greek state’s fiscal deficit for 2016 will reach four billion euros. On their part, the Commission and ECB want extra revenue measures amounting to 1.8 billion euros, whereas the Greek government points to a gap of 1.6 billion euros.
Government sources said Athens has converged with the milder assessment taken by European creditors, both in terms of the deficit and the measures needed to cover it.
As a result, delays in the review are blamed on the IMF’s insistence on immediate and effective measures to cut state spending.
The measure of reducing the tax-free ceiling is seen by creditors as expanding the tax base downwards, as reports claim creditors believe the figure is too high and allows a significant portion of visible taxable income to remain tax-free.
On its part, the leftist Greek government purportedly rejected the measure outright, insisting it can raise more revenue by increasing the rate for income brackets above 30,000 euros.