New measures required to reach an agreement with Greece’s lenders

25 March 2016
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The new round of negotiation between the Greek government and the representatives of the institutions will start in ten days from now with the worst possible omens. Regardless of whether there would be a debt relief or not and whether IMF will agree that 2015 ended with 0.2% primary surplus instead of 0.6% deficit as it claims, discussion and reaching an agreement require at least 3 billion euros new measures for 2016 – 2018 period in order to achieve a primary surplus of 3.5% of GDP.

As Secretary General of Fiscal Policy Franciscos Koutentakis stated on Wednesday, although some measures taken in 2015 added more money to state revenue than it was expected, “these measures alone cannot cover the financial gap”.

As government sources admitted, there is a difference of 3% of GDP between government’s and IMF’s calculations (ie 5 billion euros) until 2018! Even if the IMF accepts the primary surplus of 0.2% achieved for 2015, only 1.5 billion euros are covered, while the rest of 3-3.5 billion euros should be covered by new measures so as to reach an agreement with the lenders.

The Greek government will be called to propose new austerity measures, in addition to what it has already submitted to the institutions, and will be bound to take more measures whenever it receives sub-tranches, if it is proved that the either measures were not implemented or they did not performed as it was expected.

Therefore, in an effort to cover the fiscal gap and achieve the targeted primary surplus of 3.5% of GDP in 2018, the government is considering more tax measures including:

– new tax-free threshold at 9,100 euros annual income and new tax scales
– increase in excise duty on diesel
– tax hike on property income
– tax hike on property tax for those with medium and large properties
– tax hike on dividends from 10% to 15%
– fee on pay television
– increase in mobile phone fee

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