G. Kouros
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The embattled Tsipras government is apparently ready to proceed with a significant reduction in the tax-free threshold for annual income in order to meet a standing demand by creditors, and thus further clear the path towards concluding a second review of the Greek program (third bailout).
A deputy elected with the junior coalition partner, the rightist-populist Independent Greeks' (AN.EL) party, said as much on Sunday, in comments to a local radio station. MP Thanasis Papachristopoulos said the party's MPs were briefed by top ministers that the tax-free threshold will fall to 5,900 euros annually for a married person, and 5,600 euros for an unmarried taxpayer.
The current tax-free threshold stands at roughly 8,600 euros, a figure that creditors - especially the IMF - complain is too high. Creditors want to expand the tax base in Greece and get more taxpayers to contribute to the state coffers. A reduction in the tax-free threshold would affect hundreds of thousands of pensioners and wage-earners on the lower pay scales.
In echoing most forecasts coming out of the Greek capital at the end of the week and over the weekend, the same deputy predicted that a staff-level agreement will be concluded in a matter of days between the leftist-rightist Greek government and creditors.
Another interesting facet to emerge from the briefing, based on the deputy's statements, is the prospect of a reduction in the personal income tax rate from 22 percent to 20 percent, assuming that a primary budget surplus target of 3.5 percent (as a percentage of GDP) is achieved in 2018. The prospect is one of the "countervailing measures" that the Tsipras government is desperately seeking in order to "sweeten" a new round of austerity measures that will accompany the staff-level agreement - which must be ratified by a Parliament majority.
Another "off-set measure" cited in the briefing is a possible reduction in the primary business/corporate tax rate, from the current 29 percent to a slightly less painful 26 percent. However, this tax relief would again depend on the Greek state fulfilling annual fiscal targets.
