Budget oddities

The budget is one of the state’s most important pieces of legislation, with the power to bring governments down. Nevertheless, it is very seldom a topic of public discourse. The opposition will dismiss it as miserly and the government will defend it as being better than what the opposition had come up with. On TV, meanwhile, the reports from Parliament are all about the war of words between the different parties and the memory stick containing the budget data. This rather sparse mode of delivery was introduced in 2010 as a cost-saving measure, replacing the elegant folders of old containing printed documents. There wasn’t enough money for such finery for awhile, but now that we’re in clover again, the USB was delivered in a pretty little box, which probably cost more than the device itself.

No one really bothers with the actual numbers. And why would they? This is the country that paid little attention at the 2009 budget debate (on December 18, 2008), where Kostas Simitis warned that the country was going bankrupt and would have to seek help from the International Monetary Fund. Why would anyone then bother with the fact that every Greek household will have to pay 400 euros more in value-added tax in 2024? Broadcasters, instead, chose to gleefully report that pensioners are getting a 3% raise and that anyone earning €700 now will be getting €721.

Revenues from VAT are expected to increase by €1.16 billion compared to 2023. This is due in a small part to covering the “VAT gap” stemming from the containment of evasion by expanding the use of plastic money. We say a “small part” because in the four years from 2019 to the present, the containment of evasion brought in €2 billion. Therefore, the budgeted €1.16 billion should be attributed to the fact that the people getting a 3% raise had to pay – in September alone – 9.4% more for food. The hikes in the prices of food and other household essentials are not just making the profiteers happy, they are also working well for the government. They are giving it “fiscal space,” as they say on TV.

Then there’s the tax on income, which will be bigger in 2024, which is odd for a government that is said to be reducing taxation. This is, of course, the case for some. Businesses, for example, will pay €295 million less, while individuals will shell out €959 million more. Of the latter, around €500 million comes from taxes on self-employed professionals. Therefore, salaried workers and pensioners will have to make up the remaining €450 million, which is, again, odd for a government committed to reducing taxes.

There are a lot of oddities in the 2024 budget, chief among which is the perennial problem of how the heck those taxes that are supposed to be going down keep going up – and how they are distributed.