The final 2024 Budget was submitted to Parliament on Tuesday morning. The Minister of Economics, Kostis Chatzidakis, expects that during 2024, tax cuts will total around €2 billion ($AUD 3.3).
At the same time, millions of Greeks are expected to receive major benefits; civil servants with an across-the-board increase of €70 ($AUD 116) in the basic salary, an increase in the family allowance from €20 to €50 per month, a 30 per cent increase in the position of responsibility allowance and an increase in the frontier and special working conditions allowance for members of the Armed Forces and Security Forces.
The salary scale for faculty members – including both teaching and research staff – will be increased, as well as the overnight accommodation allowance for civilian and uniformed staff. With the new salary scale, the average annual benefit per staff member amounts to €2,084 ($AUD 3,470)gross or €1,476 net ($AUD 2,458). Pensioners – who are not subject to the personal differential scheme – who will see their monthly earnings increase by about 3 per cent from the 1st of January 2024; this measure abolishes the 30 per cent reduction on pensions for employed pensioners and replaces it with a 10 per cent contribution on additional remuneration received from their work.
Around 750,000 pensioners – with pensions up to 1,600 euros ($AUD 2,664) – are not entitled to increases under the legislation and will receive a one-off boost of 100 applicable to 200 euros ($AUD 333) before Christmas, while around 1.3 million low pensioners with a main pension of up to 700 euros and no personal difference will receive 150 euros. Families with children – as the tax-free threshold for employees – pensioners and farmers with one or more dependent children is increased by €1,000 ($AUD 2,164). Finally, property owners can claim a 10 per cent tax reduction if they insure their properties against natural disasters.
In general, the 2024 budget includes permanent tax cuts and income support of €1.6 billion ($AUD 2.6) for over 3 million households. This means that the measure of reduced VAT rates on transport – except taxis – and on other sectors such as tourist packages, gyms, dance schools, theatre and cinema tickets will now be permanent, while the reduced VAT rate on coffee and taxis is maintained for another 6 months until the end of June 2024. On the contrary, the government’s economic staff seems to have decided to raise the VAT rate for soft drinks sold by restaurants to 24 per cent from 13 per cent. This information alone has already caused an uproar from businesses and consumers alike, but the government seems firm on raising VAT in this case.
The government’s 2024 tax target is to collect €63 billion, to reduce VAT evasion by at least €600 million from the taxation of professionals, and to proceed with permanent tax cuts. In terms of the key figures of the new budget, the government expects that 2024 will be a fiscal year of high growth, lower unemployment, lower inflation, and lower debt, but also stronger investment. Above everything else, the government expects that labour market conditions will continue to improve and estimates that employment – in national accounts terms – will increase by 1.4 per cent, while unemployment will decelerate to 11.2% in 2023 and to 10.6% in 2024. The extent to which the second consecutive ND administration’s first budget will be successful remains to be seen, as the peripheral crises around Europe are causing severe macroeconomic uncertainty across the EU.
