Inspectors from the European Commission, the European Central Bank, the European Stability Mechanism and the International Monetary Fund are expected to return to Athens this week after following a break for Catholic Easter to continue their review of Greece’s bailout program.
Their main effort will be to find ways to cover an estimated fiscal gap of 1 percent of GDP, or 1.8 billion euros, by 2018. This would bring the Greek government closer to achieving a primary budget surplus of 3.5 percent of GDP in 2018.
The coalition government, which has a parliamentary majority of just three seats understandably wants to avoid cutting pensions for the 12th time since 2010.
Greece and its lenders plan to conclude their negotiations in time for the relevant measures to be passed before eurozone finance ministers meet on April 22.
Tax reform
In the meanwhile, Hellenic Federation of Enterprises (SEV) on Thursday recommended linking a tax-exempt income ceiling with social criteria and criticized both the government and the institutions for the agenda of a tax reform currently discussed.
“It is puzzling that the government does not even examines the case that a tax-exempt could be offered on social criteria and to those who really need it because of their family situation, very low family income, or old age. It is even more puzzling that the troika has not put it for discussion, paving the way for a new tax storm of horizontal measures,” the Federation said in its weekly bulletin on the Greek economy.
The bulletin underlined that a tax discount offered to wages and pensions over 5,000 euros meant that wage earners in the public and private sectors and pensioners were not paying taxes worth 6.4 billion euros annually. At the same time, a solidarity contribution on all incomes totaled 650 million euros and the additional revenue of the state from a proposed increase in solidarity contribution rates would be 100 million euros. SEV noted that instead of holding ideological discussions on how to put more tax burden on the very few remaining “wealthy” wage earners and pensioners, it would be more useful a discussion on when a tax-exempt was really justified by family situation. SEV added that reports over raising taxes on dividends were populistic and were undermining the attraction of private investments in the country.
The Federation stressed that in this tax environment, combined with a hostile environment for the economy, “it is necessary more than ever to upgrade a social dialogue on the outlook of incomes and employment”.
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