By Dimitris Hatzinikolas
Tuesday's high-profile statement, by the government spokesman no less, that the leftist Greek government could "consider" more guarantees in order to overcome the IMF's hesitation in remaining in the country's bailout program through 2018 -- as well as engaged afterwards -- generated considerable subsequent speculation in Athens.
Despite the fact that the Tsipras government has already conveyed its willingness to expand an automatic spending cuts mechanism past 2018, the statement by spokesman Dimitris Tzanakopoulos nevertheless raised even more questions. Among the foremost is whether the embattled government will back down to a IMF demand for a reduction in the tax-free annual income tax ceiling (currently at roughly 8,500 euros). The Fund has repeatedly pointed out that a significant portion of Greek taxpayers pay no income taxes, regardless of whether they are wage-earners on a fixed payroll or self-employed professionals and craftsmen who consistently declare income less than the tax-free ceiling.
According to a top government official who spoke to "N", the so-called "cutter", as the automatic spending cuts mechanism is called by the opposition and media, it could be "the same as the current one". In other words, spending cuts would be made against the general government budget, in case fiscal targets appear unrealized.
Such spending cuts would not affect most arrears owed to private sector, the public health sector, unemployment benefits, various other social spending codes or even public investments.
What's left, however, is the very large chunk of the Greek state's budget that deals with social security payments and spending.
Conversely, lowering the tax-free ceiling doesn't affect public spending, but instead entails a political decision -- which for the current government would be quite painful to sell to its supporters and MPs.
