Economy minister first refers lower tax-free ceiling, then issues denial

23 January 2017
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Greece’s economy minister on Sunday disclosed that the leftist government is, indeed, negotiating with institutional creditors the prospect of lowering the tax-free income tax ceiling, which is currently at roughly 8,500 euros per year.
Minister Dimitri Papadimitriou, a professor at an elite lower New York State university until being tapped for a Cabinet position in the Tsipras government, was quoted by a local media outlet in the central city of Trikala as saying the reduction in the figure is under consideration.

Lowering the tax-free ceiling is a standing demand by the IMF, which argues that Greece’s tax base is too narrow, whereas the same figure in other relevant Euro zone countries is considerably less.

Papadimitriou’s reported statement is the first time that the leftist government has acknowledged that the possibility exists for lowering the figure, something it has repeatedly pledged to defend.

“The tax-free ceiling and other things are under negotiation. As you know we are trying to keep what now exists. I don’t know if we’ll be able to keep it, but we’ll do the best we can,” he was quoted as saying.

The statements by Papadimitriou were widely seen as overturning Athens’ refusal to take any more austerity measures, with reactions within the government on Sunday evening coming almost immediately.

As a result, the US-based academic later issued a written statement, underlining that “there is no decision by the government, nor is a reduction in the tax-free ceiling among its intentions. Negotiation over fiscal targets in the coming (after 2018) are continuing and the government does not accept the enactment of any measure after 2008.”

Earlier, an interview by FinMin Euclid Tsakalotos that was published in the Athens daily “Ethnos” reiterated the oft-repeated pledge that his leftist government will not proceed with more austerity measures.
Tsakalotos added that he considers the chance that such measures will be needed, in fact, as remote.

Nevertheless, Tsakalotos attempted to include all future prospects and developments in his next statement, explaining that his office is preparing a letter to the Eurogroup that will “include a commitment for new measures after 2018, which however, the (Greek) government considers that they (measures) will be described, but will not be enacted (via Parliament ratification) nor will they be implemented, due to the positive course of the Greek economy until then.”

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