The primary surplus of the state budget is running at four times the original target, reinforcing the government’s economic team estimates that this year’s fiscal performance will reach record levels.
Based on this positive data, the government’s economic team is already working on proposals for tax cuts for the middle class, support for vulnerable groups, alongside housing interventions, so that final government decisions on the prime minister’s announcements at the Thessaloniki International Fair will be made within August. Currently, as evident from statements by National Economy and Finance Minister Kyriakos Pierrakakis, after the approval of the escape clause at the Eurogroup, the plans for the TIF package involve interventions with a fiscal cost of 1.5 billion euros.
Primary surplus reaches record levels this year
The budget for the five-month period January-May closed with a primary surplus of 5.343 billion euros, more than four times higher than the target of 1.055 billion euros that had been set.
This development is attributed to the overperformance of tax revenues due to tax evasion prevention measures and strong economic growth performance. These two factors are expected to maintain their momentum in the coming period, creating reasonable expectations in the economic team that this year’s primary budget surplus will exceed 10 billion euros. This means the updated target of 3.2% of GDP surplus will be exceeded, reaching new higher levels toward 4%. Last year, despite conservative initial budget targets, the primary surplus soared to 11.4 billion euros, equivalent to 4.8% of GDP.
Thessaloniki International Fair package on the table
The government has already announced that the TIF package will include new tax cuts for the middle class and wage earners, support for the vulnerable, and housing interventions. Among the measures being discussed are:
- Tax cuts for middle incomes through interventions in tax brackets and rates of the tax scale.
- Tax relief for families with children to support families, while scenarios include raising the tax-free threshold.
- Reduction of tax burden on rental income, alongside providing incentives for owners to make available closed houses they own to the market.
- Support for tenants to cope with high rental costs.
- Regulation to unblock urban planning and other problems and make available for sale 35,000 properties currently in bank and servicer portfolios.
Source: ANA-MPA
