The draft Greek state budget for 2023 is expected to be finalized this week, before it is submitted to Parliament on October 3.
Key features include tax cuts for citizens, especially for pensioners and civil servants, through the abolition of the solidarity tax and wage increases. Lost budget revenues will be compensated solely through economic growth and the fight against tax evasion.
The draft budget also provides for a primary deficit, but its assessment will not be final until the European Union decides whether to continue using the exclusion clause due to high inflation and large financial needs to support society.
Finance Ministry sources said the government needs to balance the need to support citizens with the need to be financially responsible to international markets as its goal is to reach investment grade within 2023.
Recent statements by Finance Minister Christos Staikouras showed that GDP will grow by 5.3% this year (from 3.1% budgeted), compared to 3.1% on average for EU, and the economy will grow by 2.1% in 2023 compared to the EU, with an average of 0.9%. (Mr. Stajckuras modestly kept silent that this 5.3% budget increase will occur due to inflation, which, according to various estimates, will be at least 12% by the end of the year, which means that real GDP growth is minus 6.7%.
The total amount of interventions is 3.2 billion euros. It includes:
- the abolition of the solidarity tax on all income from 1 January 2023 (1.24 billion euros);
- increase in basic pensions of 1.5 million pensioners by 6% (at least 600 million euros);
- tax cuts for businesses that hire more full-time employees for at least 3 months (introduced as early as September 1);
- 50% student accommodation subsidy;
- extension of low VAT on transport, coffee, soft drinks, gyms, dance schools, films and travel packages until June 2023 (€246m);
- continuation, if circumstances permit, of the fuel oil subsidy of approximately 0.25 EUR/litre until 2023, after it expires at the end of 2022.
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