The possibilities and fiscal strength for additional interventions in taxation and the labor market are at the heart of the government, and exercises have already begun with the aim of establishing the minimum and maximum amount of support measures that can be taken.
And this as the fiscal space changes hour by hour since the prices mainly of natural gas and electricity are constantly changing, a development that also leads to the increase or decrease of the available fiscal space.
The price of natural gas and electricity, market revaluations and household problems are the factors shaping both the fiscal space and the support measures.
The government, with the Stability program of April, had already calculated for the entire year interventions of a total amount of 2.8 billion euros.
Of this amount, 2 billion euros have already been allocated and remain based on the target of around 800 million euros to be allocated mainly for the support of electricity consumers. It is not excluded, however, that receipts mainly from tourism (essentially increase indirect taxes) will increase and, as a top factor of the Ministry of Finance states, based on today’s data, the amount available will reach at least 800-1 billion. euros and a maximum of 1.5 billion euros in the last 3-4 months of the year.
However, he explains that the increase in available fiscal space does not mean that households will receive more. And this as the prices of natural gas and electricity change on a daily basis limiting the amount available.
Therefore, based on planning, the amount available to support households from September is estimated at 800 to 1.5 billion euros depending on the evolution of public revenues. The extreme swings in gas and electricity prices change on a daily basis how much the government will need to support households. According to the calculations of the financial staff, to cover the cost of electricity, the following are required:
– In the event that the TTF (Title Transfer Facility or Title Transfer Fund) is established at the level of six months at 100 euros/MWh, the wholesale price of electricity reaches 245 euros per megawatt. The fiscal space required to cover household costs is estimated at 1 billion euros.
If the TTF rises to the six-month level of 150 euros/MWh, the wholesale price of electricity reaches 350 euros/MWh. In this case, the amount required to cover needs amounts to 1.4 billion euros.
What has the government provided so far?
-An amount of 320 million euros was given in April to 1.7 million citizens.
– An amount of 300 million euros has already started and is being allocated to electricity consumers (power pass).
– The two interventions of the fuel pass (fuel subsidy) amount to 300 million euros. In fact, the relevant platform for the submission of applications by the beneficiaries is expected to open next week.
-An amount of 220 million euros has been allocated for Diesel traffic
-A fund of 500 million euros has been allocated to public bodies
– 50 million euros to farmers.
-60 million euros to livestock farmers.
-The remaining 250 million euros in various branches of the Greek economy.
However, in the previous days, the Minister of Finance Christos Staikouras landed the expectations for a large fiscal space and by extension many benefits to the TIF, created by the overperformance of the revenues by 5.1 billion euros in the 7 months of January-July. Mr. Staikouras said that the figures cause satisfaction, but not excitement. Not all of the 5 billion euros is due to the good course of the economy. He specifically stated that what was collected in June does not have permanent characteristics, since it corresponds to the one-time payment of 1/3 of the amount owed, instead of installments. Also, over 1 billion in collections from ENFIA were estimated to be collected later in the year.
TIF interventions
For next year, the Prime Minister has already announced interventions in both taxation and increases in pensions, measures which, together with other measures, will be specified in September in Thessaloniki. The TIF package will include
-Pension increase. Pensions are unfrozen after 12 years. Based on the calculations of the financial staff, the increases will range after 4%-5% from the new year. According to the legislation, pensioners who do not have a personal difference or have a negative personal difference will receive the increase.
-Increase of the Minimum Wage. After raising the minimum wage last May to €713 (gross) from €663 previously, the finance staff is considering a new increase in mid-2023. It is noted that the May increase resulted in an additional wage (50X14= 700).
-Solidarity Contribution. The solidarity levy instituted in 2011 will be abolished in the new year. For private employees, the solidarity levy has been suspended from 2021, while it will be completely abolished from 2023, taking public sector workers and pensioners along with it.
Source: Capital
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