Leeway for more tax breaks

Finance Minister Christos Staikouras has created some hope for more tax breaks, as long as the growth rate manages to outperform the official forecast, while ministry sources say any such decisions will be postponed until it’s time for the final budget draft submission, in late November.

Staikouras was asked on Skai TV on Tuesday about the possible abolition of the solidarity levy for public sector workers and pensioners. His response was: “If growth is higher, there will be fiscal margins,” whose utilization will be discussed then.

He further noted that the leeway for greater fiscal flexibility will be to the benefit of middle and lower incomes. A little earlier he had said that early indications for the third quarter of the year point to the growth rate exceeding the official estimate announced by the prime minister 10 days previously in Thessaloniki, amounting to 5.9%. Such is also the conclusion of most rating agencies after updating their forecasts.

This reopens the discussions about new measures. It is noted that, besides the abolition of the solidarity levy for civil servants and retirees, another outstanding issue is the further reduction of social security contributions.

Still, ministry sources say that any decisions will have to be based on whether the features of the increased growth rate are one-off or permanent. It is only if the higher growth is based on factors that constitute solid grounds for growth, such as exports and investments, that one can make plans for permanent measures, they stress.

On Wednesday Greece’s creditors are about to release their 11th post-bailout assessment, which is also expected to be favorable, while negotiations with the chiefs of mission for the 12th round of the enhanced surveillance process will take place on October 19-20.

Sources say the creditors will focus on second-quarter growth data and especially investments and reserves, so as to establish their permanent or temporary character and make a new forecast on the GDP.