Bleak summer, gloomy fall

The major bargain for our additional loan, in order to meet the borrowing needs we cannot cover while we remain blocked from the markets, will start today in Vienna in the meeting of the representatives of the European Finance ministers.

Due to current circumstances, talks will include the terms and considerations that will be based on the sustainability report of the Greek debt, which the Troika auditors will deliver to Brussels, Frankfurt and Washington within the next few days.

Already though, and while awaiting their evaluation, the Fitch rating agency maintains that the Greek package will have to reach 90-100bil euros to fully cover Greece’s needs until 2014.

In any case, the mid-term austerity plan will be presented in its entirety at a cabinet meeting, probably next Thursday, and will provide additional measures of 6,4bil for 2011 and a total of 28,5 by 2015.

In their meeting yesterday, Giorgos Papakonstantinou and the Troika representatives decided upon the new tax measures that will bring major losses for wage earners, even from this summer.

The immediate measures

Taxpayers will feel the burden of new measures from July 1st. The dues in their wages will be higher, especially if the government does reduce the tax-free limit for individuals. The situation is even worse in the public sector, as there will be a storm of organisations closing down, transfers and even layoffs in SOEs.

Apart from the measures that will be implemented immediately, the government is laying the groundwork in order to sweeten the pill of mass transfers of products and services from the low VAT level of 13% to that of 23%. For the benefit of the state, this is being examined to coincide – possibly in late autumn – with the reduction of the VAT rate by 3 percentage points (from 23% to 20% for the high level and 13% to 10% for the low one).

At this stage however, the measures that will underpin the assessment report by the Troika will include:

* increased tax dues for wage earners from July 1st.
* the tax that will be deducted each month will be calculated on the new scale and the reduced tax-free limit, which will be between 6.000 and 8.000 euros. The reduction of tax exemption seems certain for freelancers and not so certain for employees

Gloomy fall

And as if all this were not enough, in the coming fall:

* restaurant services will be moved to the higher VAT level (23%)
* heating oil prices will be equated with diesel fuel
* vehicular taxes will increase by 10-20%
* refreshments and natural gas will receive a new tax
* cheap cigarettes tax will increase
* refreshments and natural gas will receive a minimum consumption tax
* unauthorised structures will be taxed
* the FMAP tax-free limit will decrease by 100.000 euros
* boats, pools and expensive cars will receive increased taxes

Housing and other social benefits will also be scrutinized.

Regarding the Public Property Fund, and even though Finance Ministry sources claim that "it will not be given to individuals", in essence it will be supervised directly by the Troika technical support.

These measures will be discussed and ratified at the crucial Eurogroup councils on the 6th and 20th of June, in view of the summit at the end of the month.