What is on the table for the TIF package

By Tasos Dasopoulos

The replenishment of the loss of income due to the accuracy but also permanent interventions, which will lead to a permanent increase in wages and pensions, is the double objective of the economic policy as will be analyzed in TIF by the Prime Minister for the rest of 2022 and 2023.

These two goals correspond to specific measures that will be applied on a case-by-case basis if they do not divert the country from its fiscal goals and at the same time have a substantial effect on available incomes.

In the first phase and as long as the energy crisis and high inflation last, priority is given to measures to replace part of the income. The “core” of these measures will be the continuation of income support through the absorption of the readjustment clause to a percentage of even 90%, as it is considered that the increases in the current, put more pressure on low and medium incomes. The Government’s original plan had a budget of 2 billion until mid-2023. However, the rally in international gas prices to which electricity prices are linked over the past two months portends a bigger budget to implement the measure, according to the announcements

The second support measure will be a third fuel subsidy, similar to the one applied these days. Fuel pass 3 will be reviewed as, based on the data of the Ministry of Finance, of the approximately 2,000,0000 beneficiaries who have been paid the second subsidy so far (fuel pass 2), 2/3 preferred to lose the bonus of 15 euros, for to take the money into their bank account instead of “loading” it into some electronic wallet, from where they could only use it to buy liquid fuel.

The third supporting measure on the table is a second … “accuracy check”. Developments have shown that the 200 euros given to around 2 million beneficiaries in April is not enough. The thoughts that exist are either to increase the benefit horizontally for everyone or to have a scale with the least vulnerable receiving 200 euros or less and the lowest incomes getting 300 euros or more, depending on the money that will be available.

A fourth measure of support will be an increased heating allowance for the winter of 2022-2023.

The permanent interventions

More difficult is the plan for the permanent interventions that are planned to be implemented for the next year.

The best known is the extension of the abolition of the special solidarity contribution, to the public and pensions. A measure that will cost an additional 450 million euros for the next year

The second best known is the increase in pensions for those pensioners who do not have a personal difference. The increase will be double, since it will be equal to half of the growth rate and half of the annual inflation. And this measure is estimated to cost around 400-450 million euros

The third is the marginal solution for retroactive supplementary pensions and gifts that were cut in 2012, for which the Supreme Court vindicated all those who had gone to court. The co-competent ministries of finance and labor are looking for a permanent solution for everyone, so that the issue does not affect the next budgets. The cost will be around 600 million euros if it is chosen to pay only those who have appealed and 2.5 billion if all beneficiaries are paid

A measure without budgetary costs, which will proceed within the first quarter of the year, is the decisions on the new increase in the minimum wage, with the relevant negotiations starting from the beginning of 2023.

The conditional measures

In addition to these, additional measures are being considered, the implementation of which will depend on the fiscal space that will exist in 2023.

One of them is the overall reduction of insurance contributions by 3.9% from 2019 ( namely 0.9% in 2019 and 3% from 2020 ) to increase to 4.9% in 2023. This will be done by reducing an additional 1% of the insurance contributions, in order to fully implement the relevant pre-election Government announcement.

Also, the further reduction of the corporate tax rate from 22% to 20% is being considered. And this measure will implement the relevant pre-election proclamation, which, however, is doubtful if it can be implemented together with all the other measures in 2023.