ATHENS – Although Greece’s creditors have already ruled out lowering a primary surplus requirement of 3.5 percent of Gross Domestic Product (GDP,) Greece’s new Prime Minister Kyriakos Mitsotakis said he will forge ahead with plans for tax cuts to lure investors.
The Conservative leader mathematically is in a tough spot, however, as former Premier and Radical Left SYRIZA leader’s last-minute handouts of tax cuts and pension bonuses – after raising taxes and cutting benefits – cost the state’s coffers 1.7 billion euros ($1.92 billion.)
That’s equivalent to about 1 percent of GDP and ate up a big chunk of a bigger-than-expected primary surplus that was built partially by withholding payments to people and businesses owed money by the state.
It also doesn’t include interest on 326 billion euros ($367.97 billion) on three international bailouts that expired on Aug. 20, 2018 after nine years and with Greece still unable to make a full return to markets with prospective investors scared off by SYRIZA tax hikes that raised the corporate rate to 29 percent and hard-core elements rejecting foreign firms.
Grilled on the BBC’s Hardtalk program, he said his “selling point” would be try again to convince the Troika of the European Union-European Central Bank-European Stability Mechanism (EU-ECB-ESM) to ease high annual fiscal targets.
If those aren’t met it would trigger automatic spending cuts and yank away his ability to make the tax cuts he said are critical to push a slowly-burgeoning recovery at the same time he said he would restart major projects stymied under SYRIZA.
Asked if an ambitious plan to cut tax rates will threaten social subsidies and pensions, he said there wouldn’t be cuts in social security benefits but didn’t indicate what he’d do about other programs for the middle class and poor.
He vowed that a first round of tax cuts begin Jan. 1, 2020 and initially be aimed at helping businesses and people owning property but didn’t say what he would do about the hated ENFIA property tax surcharge.