Targeted reduction in tax rates in wage labor and reduction of insurance workers and business, prefers the State Budget Office In Parliament, for the exploitation of the fiscal space, which must move quickly.
During the presentation of the quarterly March 2025 report, drafted by the State Budget Office, before the competent Parliamentary Committee, Ioannis Tsoukalas Coordinator was asked many times by MPs about surpluses, fiscal space, financial policy, financial policy, Funding by TAA.
As for GDP head, during the briefing, Mr Tsoukalas referred to estimates showing that at least seven to ten years will be required in Greece to approach per capita income at pre -financial crisis levels, which are still significantly short of the average in the Eurozone.
The surpluses
Referring to the surpluses, Mr Tsoukalas attributed them to the unprecedented discovery of taxable material and the coordinator’s estimation is that this is also confirmed in tax returns for 2024. “With all this digitization that is taking place, the tax base has been expanded. That is, these additional revenue we see from VAT but also from incomes that we could not discover before, seem to be permanent because of the evolution of technology, “Mr Tsoukalas said.
The surpluses also attributed to the development of the economy and the reduction of expenditure. “Certainly not over -taxation, based on the data available to us, for this surplus record,” he said, noting that the tax rates, for natural persons and businesses, since 2020, remain the same and some have declined.
Targeted tax deductions
“The question is what we will do with the surplus. We have achieved, between 2023 – 2024, a debt reduction of GDP, 10 percentage points, well above the 1% that the new EU economic governance framework wants, “Mr Tsoukalas said, adding that” our position is, as we have developed in the reports, that we must now use it, that we need to use it, that we must now use it, that we need to use it, and insurance contributions, employees and businesses and, above all, to support young people in terms of insurance contributions. “
The budget office coordinator did not fail to point out that the taxation of natural persons is characterized by two distortions: the abrupt change of the tax rate from 9%to 22%, for incomes of more than 10,000 euros, which should somehow be smooth, and the second is more than 44%.
“These two distortions create disincentives for work, mainly for the work of people with high skills that some may want to return to Greece but because of these high -tax rates, for this income, they think it two and three times,” Mr Tsoukalas said.
“Therefore, this fiscal space must be used, as faster as possible. The mixture cannot be decided by us, but also with the discussions we have here, we think we can help the financial staff to make some targeted tax deductions and perhaps some other burdens, such as insurance contributions, “he said.
After TAA
At this point, however, Mr Tsoukalas pointed out that all forecasts of international organizations show a slowdown in the growth rate of the Greek economy, between 1% and 1.5%, from 2027 onwards, when the funding from the recovery fund is over.
“I think we will have a slight increase in productivity, due to the investments made now and the capital that will enter the economy. So assuming that growth is slowing down, then we want higher primary surpluses, so that we can drop the debt to GDP faster, “he said, he said that everyone should have in mind in the process of transforming the debt of debt from the official sector.
“I want to say that we will be more vulnerable to fluctuations in the bond market as we go to market terms. That is why we insist very much in reports that as the economy grows quickly, it is good to reduce the debt to GDP debt, as quickly as possible. Let’s go faster, to 100%, which is something like a psychological limit for markets, 100%. We are now at 153%. At least we do not have the lead in this index, “said the budget office coordinator.
He also noted that the rating agencies, “although we are upgrading us, put a lot of asterisks”, because “we have good fiscal performance but at the same time they tell us that our financial model is mainly based on two pillars, tourism and shipping,
Therefore, Mr Tsoukalas said, other areas such as processing “seems to be jumping but must be further supported” must be developed.
In relation to TAA funding, Mr Tsoukalas noted that the figures show that very large businesses are getting funding, loans from the TAA but the question is whether small and medium -sized enterprises are demanding loans from TAAs or whether they generally call for loans from the banking system because ” The high borrowing rates have not yet come down as much as we would like, as he said and added: “We are waiting in 2025 to start seeing an increase in funding from banks that have been fully consolidated.”
GDP per capita
The budget office coordinator was emphatically referring to the losses of the 2008-2016 financial crisis. “Losses were monstrous during the crisis. What happened resembles a war, “Mr Tsoukalas said. “GDP per capita was 21,000 euros in 2007. With existing cases, the good scenario is to reach 2032 and with the most restrained scenario in 2035. So we are discussing for another eight to ten years, to reach the nominal GDP at 21,000 euros and this is well below 90%.”
Defense industry
Referring to defense spending, he emphasized what the state budget office report also points out that from now on they must be done with the development of the defense industry. “Many of the states we are now seeing in the technological field, many of the technological discoveries have begun through defense spending, namely the development of new technologies in defense systems. Therefore, for us, it would be a greeting work to enter this good cycle, to develop research and innovation through defense spending, “he noted.