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Effective measures are wanted

20 November 2013 / 18:11:04  GRReporter
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The draft budget for 2014 will be submitted for a vote in parliament tomorrow but since the Troika has not approved it, there is a risk of it being changed, while in force, after the government and the Troika reach a final agreement.

According to the information that has leaked out from the government, the atmosphere during the negotiations with the lenders is particularly tense as it is not certain whether the parties will reach an agreement before the Eurogroup meeting on 9 December. The reason for this is the package of measures demanded by the Troika, which now amounts to 1.8 billion euro and which is constantly increasing since the lenders reject many of the 1.3 billion euro measures planned by the Greek side. In other words, the initial differences in the calculations of the two parties amounting to 500 million euro are significantly increasing, as the lenders’ representatives do not accept that the government measures will bring 1.3 billion euro and insist on new measures that will certainly bring the expected results.

"Although we are gradually reducing the difference in the calculations, regarding the budget gap, the probability of us being able to complete the talks by 9 December is 50-50", said a senior official at the Ministry of Finance.

At the same time, the government excludes the possibility of imposing new horizontal measures such as the reduction of the salaries and pensions in particular. Without such measures, however, the two parties will not be able to accommodate the differences in their calculations.

Today, the Minister of Finance will have another meeting with the representatives of the lenders in a final attempt to eliminate the differences between the two parties in terms of the budget gap for 2014 in order for the draft budget to be submitted to parliament tomorrow, with the approval of the Troika.

The differences in the estimates are "qualitative" too

The differences in the estimates of the Greek government and the Troika remain significant, amounting to nearly 2 billion euro.

In addition to the billion-euro differences, however, the recent meetings between the two parties have revealed some "qualitative" discrepancies, namely that the government is proposing measures and the Troika is either rejecting them or drastically reducing the expected fiscal benefits.

Regarding the package of structural measures aimed at the saving of 1.3 billion euro proposed by the government for 2014, the Troika reacted in the following way:

- It rejected the proposals of the Ministry of Employment regarding the collection of 800 million euro from the fight against the non-payment of social security contributions and from the acceleration of the collection of overdue debts to social security funds.
- It does not want to cut the public investment programme by 200-250 million euro.
- It does not accept the revenue of 350 million euro from "fiscal consolidation".

Taxation of capital

Meanwhile, in conjunction with the introduction of the single property tax, the planned reduction of the property transfer tax from the present 8% and 10%, to 3% as of 2014 will lead to new changes in the taxation of capital.

The specific reduction of the tax rates has further bothered  the Ministry of Finance because, in addition to the gap caused by the new property tax which is estimated at 250 million euro (or at 400 million euro, according to the Troika), it is expected that it will lead to lower proceeds from this tax.

In this connection, the two parties are discussing the proposal of reducing or even eliminating the non-taxable minimum for the acquisition of a first home.

In particular, the talks provide for the complete removal of the non-taxable minimum as well as for the reduction of the minimum for the acquisition of a first home through purchase, donation, inheritance or help from parents by 50,000 euro.

In practice, this means that today's non-taxable threshold for singles to the amount of 200,000 euro will be reduced to 150,000 euro and from 250,000 euro to 200,000 euro for married persons. On the other hand, the parties are examining the possibility of reducing the non-taxable minimum for the purchase of a building plot for a first home, which today amounts to 50,000 euro for singles, 100,000 euro for married persons and increases by 25,000 euro for each of the first two children in a family.

A new method of calculating the lump-sum compensation on retirement

In an attempt to limit the "coercive" effect of the new rules that will come into effect from 1 January 2014, Deputy Minister of Employment Vassilis Kengeroglou announced yesterday in parliament the probability of the government applying a new method of calculating the lump-sum compensation on retirement.

In response to a question by SYRIZA deputy Dimitris Stratoulis, the Deputy Minister noted that the Ministry is examining a proposal that provides for the overdue obligations to social security funds to be calculated every ten years.

Vassilis Kengeroglou also stressed that the aim of this new method of calculation is to smooth things out in order to avoid a "coercive change" in the lump-sum compensations on retirement. The Deputy Minister of Employment commented on the rumours about the possible cuts in basic pensions, describing them as ungrounded.

Freezing the aids

Tags: TroikaNegotiationsBudget2014Lenders
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