Refineries to fuel new handouts next year

The government is making its plans regarding the benefits package for election year 2023, with the main funding source being the taxation of refineries, based on a new European regulation, which is expected to bring in up to 600 million euros.

Sources say it is possible that the new package will be announced by Prime Minister Kyriakos Mitsotakis during the budget vote in Parliament on December 17, although its design has not yet been finalized.

The government’s aim, in any case, is not to miss the budget target of a primary surplus of 0.7% of GDP in 2023. Therefore, a windfall tax on refineries is an opportunity, as it is not budgeted and therefore its provision will not increase costs or compromise the objective set.

However, Finance Ministry officials point out the amount that will ultimately be available is not yet clear. The decisive factors will be the price level of natural gas, which has increased in recent days, but also the course of the country’s gross domestic product.

The third-quarter data released on Wednesday defied the optimistic forecasts and narrowed the likely available fiscal space in 2022. The ministry estimates that the data may be revised upward in 2023, but that is not yet certain.

In any case, the planned benefits package of the government will concern 2023, in view of the general elections.

A new “inflation handout” is on the table, which will probably be given to vulnerable households, with somewhat expanded criteria. If it covers, for example, 1 million households and the entire amount is provided in a lump sum, each beneficiary will get 600 euros.

Nevertheless the figures change from day to day. For instance, when the budget was tabled the ministry estimated that there would probably be some €400 million left over from the €1 billion reserve to subsidize electricity bills; now the price of natural gas has somewhat changed the conditions, reducing the leeway.

What is certain is that the government will look for every possible opportunity to support households in the runup to the elections. The relevant directive from Brussels is to limit governments to minimalize and target measures as much as possible.