Economic measures in pipeline for TIF

Pension hikes from January 2023, a gradual return of retroactive payments to pensioners amounting to 2.6 billion euros, a new increase in the minimum salary and tax breaks are among the measures Prime Minister Kyriakos Mitsotakis is expected to outline in his keynote speech at the Thessaloniki International Fair (TIF) in September.

The Finance Ministry is already working on the cost of the measures – based on the budget’s limitations – but also on finding offsetting measures that will allow the government to negotiate with the European institutions. Despite the fact that Greece will no longer be under enhanced surveillance from August, any measures still need European consent, ministry sources say – and this means finding the resources.

The package of measures being put together will seek to relieve middle- and low-income earners from price hikes, especially in energy, while sending a message that the government has not slowed down on promised reforms and tax cuts.

Of course, the government cannot rely only on the increase of gross domestic product this year, as rampant inflation is making it difficult for the ministry to formulate the final package.

Government sources say that under current conditions there is no room for sweeping interventions that could exacerbate an already fragile fiscal situation and expose the country to more risk if the energy situation worsens. Therefore, any planned interventions will have a four-year horizon.

In particular, the measures will concern pensioners, workers and companies. For pensioners, the government is preparing an increase between 4%-5% from January 2023, based on ministry calculations, and possibly the retroactive payment of holiday bonuses for 2015-16 even to civil servants and pensioners who had not taken recourse to justice.

Another measure concerning both pensioners and civil servants is the abolition of the solidarity tax from 2023. Workers also stand to benefit from the further increase of the minimum wage, in mid-2023.

The government plans to reduce social security contributions by up to three percentage points, thereby benefiting salaried workers too, while the corporate income tax rate will drop from 22% to 20%, and the fee to exercise certain professions will be halved or waived altogether.