Speaking at the “7th InvestGR Forum 2024: Charting the Future”, the Minister of National Economy and Finance Kostis Hatzidakis focused on the government’s determination to remain consistent with the policy of fiscal seriousness.
As he said, “those who temporarily dress up as Santa Clauses turn out to be Dracumels” as they promise more than the fiscal margins can bear leading to what the country has experienced in the past decade.
Mr. Hatzidakis noted that Greece has managed to show surpluses in the execution of the budget without increasing taxes. As he said, in the last two years this was achieved mainly by increasing the growth rates which are among the highest in Europe, but also through the systematic effort to deal with tax evasion which is bearing fruit. The role of inflation has been significantly reduced as it has registered a significant reduction from 9% two years ago to 2.5% today. Thus, the government is able to execute the budget consistently, meet the needs of the citizens and remain ready to deal with emergencies such as natural disasters.
“At the end of the journey, when you have dealt more fundamentally with the issue of tax evasion, you can reduce taxes and insurance contributions more. So, tackling tax evasion is not just a policy that has a social justice label. You can also from a liberal point of view, if you look at it, conclude that you are ultimately serving healthy entrepreneurship and investments, because by facing this structural weakness of the Greek economy, you can have the scope to reduce taxes and insurance contributions” said Mr. Hatzidakis.
Asked regarding the possibility of a reduction in VAT rates, Mr. Hatzidakis emphasized that “in our country we must constantly distinguish, following the dramatic experience of the past decade, the popular from the populist, the truly pro-popular from the demagogic”, while he emphasized that the proposal to reduce the VAT in Greece “has clear populist characteristics”. As he said, previous governments had proceeded with reductions in VAT rates without impressive results and without reaching consumers. “We don’t want to make the same mistake. We believe that in Spain, where it was done, it did not work. After all, there have been periods, recently, when Greece in some months had lower inflation than Spain, without us having reduced the VAT”, he said. At the same time, he emphasized that in Greece there is not the same flexibility as in other European countries due to the servicing of the public debt and defense and pension costs. “All three of these make Greece a special case in Europe,” he said, emphasizing that if these resources are missing, the burden will be borne by the Greek citizens.
Speaking regarding the initiatives to deal with inflation, Mr. Hatzidakis noted that “there are no magic recipes. Fortunately, the matter seems to be moving – unless something unexpected happens – in a de-escalation. In Greece we had 9% inflation in 2022, 4% in 2023 and now we are at 2.5%”. In this context, he recalled the moves the government has already made to help the citizens: “I am not only referring to DIMEA’s controls, nor to the fines that have been imposed. I also refer to the increase in the salaries of public and private employees. The increase in the minimum wage, despite some who insist on distorting the situation. It is well above the increase in inflation.”
Finally, referring to the new taxation system for freelancers, Mr. Hatzidakis noted that “only three out of 10,000 freelancers have proceeded to challenge the income tax”, stressing that by last night 386,000 freelancers had submitted their tax returns and from of those only 122 have proceeded to challenge.
“I understand that it is not a pleasant measure for some, but if the taxation was so unfair, as long as there are possibilities of contestation, they would take advantage of it more”, he emphasized, saying that this year, following many decades, the average worker and pensioner will pay less taxes than the average freelancer. Responding to whether there will be changes in the taxation system of the self-employed, he noted that the submission of tax returns has not yet been completed in order to examine the available options, but emphasized that “the government, without being arrogant and indifferent, cannot at the same time to adopt measures of social injustice in its policy. That is, he cannot under any circumstances come back and tell the pensioners and the workers that “you are the underdogs, because we are doing some calculations of political costs”, he concluded.
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