The leftist-rightist coalition government in Greece is promising to implement tax relief from the start of the new year, Prime Minister Alexis Tsipras said. In his speech at the assembly of the northern Greece industrialist association, the PM expressed his personal belief that Greece’s “credibility of the public finances” allows for “targeted” tax cuts.
“The more the economy stabilises and offers high rates of growth, the more it offers us an opportunity to proceed with (tax) relief, with a permanent reduction in tax rates, and of course, ones affecting individual taxpayers,” Alexis Tsipras told the crowd in his speech. However, with an election scheduled to take place in 2019 at the latest, it remains simple to see why some are taking his statements with a grain of salt.
Meanwhile, a number of cabinet members have also been vocal about the rest of the austerity measures included in Greece’s bailout program, implemented by the Eurozone and the International Monetary Fund (IMF).
The PM and his junior coalition partner, Panos Kammenos are quietly hoping that the agreed pension cuts will not have to be implemented and they base their hopes on the surpluses of the Social Security Entity. According to statements made by Greek Labor Minister Effie Achtsioglou, that surplus could go beyond €1.3 billion, which would allow the measure to be dropped entirely. It was pointed out that such a measure was only voted in to Parliament due to the insistence of the IMF.
However, the IMF and the European Working Group (EWG) are not so lenient, insisting that these pension cuts be implemented by the start of the new year, alongside a new series of added tax reforms. Through his statements, the chief of the EWG Hans Vijlbrief pointed out that the agreement was for the benefit of the country’s financial status and so that it can regain its confidence in the markets.
“Anything else is self-defeating and Greece should not want to go down that road again,” he said.
Also, an EU senior spokesman said that the pension cuts will proceed as scheduled and Greece will be “wise” to not attempt any alterations, further adding that these cuts will only apply until the end of 2019.
In addition, tensions seem to be further rising between the Eurozone and the coalition government, as they insist that the new tax increase law that was meant to be implemented for the five islands suffering most due to the migration crisis, must go through. However, Greece’s PM has shown no intention of doing such a thing, as he has stated that the VAT will remain frozen for those islands “for as long as the crisis continues”.
In the meantime, Mr Tsipras is forced to deal with criticism from inside as well, as the Hellenic Federation of Enterprises (SEV) president Theodoros Fessas expressed his concerns regarding the government’s policies, which could chase away potential foreign businesses, especially in a time during which the country is in dire need of investments.
“At the same time, there’s an attempt to divide entrepreneurship in the country into ‘good’ and ‘bad’. The markets will not forgive such double-talk, or the reversal of reforms and (political) polarisation. A return to normalcy is not served in such a manner,” he said.
However, Mr Tsipras accused the Federation of demanding “anti-social and anti-growth measures even greater” than those asked by the loaners, this time seeking pension cuts.
A spokesman for the PM’s office carried on with the attack: “…in our effort to restore labor relations, we have against us Mr Mitsotakis, who refers to an outdated eight-hour work day, but SEV as well, which through its unacceptable intervention, insists on pension cuts in 2019, as well as the lowering of the tax-free annual income threshold… SEV’s wholly political motives are proved by today’s statements by the SEV president, who again attacked the government.”