The government appears ready to sign off on measures totaling 5.4 billion euros, or 3 percent of GDP instead of a 4.5-percent figure, days before talks resume with the country’s institutional creditors to achieve an increasingly delayed first review of the Greek program (third bailout).
By Thanos Tsiros
The government appears ready to sign off on measures totaling 5.4 billion euros, or 3 percent of GDP instead of a 4.5-percent figure, days before talks resume with the country’s institutional creditors to achieve an increasingly delayed first review of the Greek program (third bailout).
According to Greek government sources, the higher figure was a demand by the IMF, although the ongoing refugee crisis plaguing Greece was cited as the primary reason behind the Fund’s reputed “softening” – a development, which if it pans out, will mean 2.7 billion euros less in taxes and pension cuts.
Nevertheless, the remaining 5.4 billion euros in measures will still come mostly from hikes in direct and indirect taxes, especially from the so-called “medium” and high-tax brackets.
Specifically, 1 percent out of the 3 percent of GDP in measures (1.8 billion euros) will come from pension reforms, according to a government spokeswoman on Tuesday, which means varied cuts in social security benefits and bonuses along with proposed – by the Greek side – hikes in monthly social security contributions by wage earners and employers.
In terms of tax hikes, most brackets above the roughly 9,000-euro annual income ceiling are expected to pay higher rates, along with a recalculation of a so-called “solidarity tax”, upwards, and higher tax rates on corporate capital gains.
On the “guns and butter” front, a reduction of 100 million euros is expected in defense spending, rather than an initial 500-million-euro figure, as reported this week by “N”.
A third “pylon” of the expected "bill" is a more effective way of accumulating VAT remittances, curbing fuel smuggling and increasing e-transactions, amongst others.