Greece’s Budget 2012: Recession, Unemployment, High Taxes

Greece’s Budget 2012 has been submitted to the Parliament on Friday after being approved by the Cabinet. According to the text tabled at the parliament, the Budget 2012 estimated that recession will be reduced to 2.8%, unemployment to exceed 17% and new taxes to empty taxpayers’ pockets by 12 billion euro. Main target if the Budget is a primary surplus.

Finance Minister Evangelos Venizelos expressed optimism that begins with ‘reversing the country’s path to primary surplus”. Speaking at the Parliament Venizelos stressed four main points of next year’s budget:

1) Primary Surplus is expected to reach 1.1% of the GDP 2)Reduction of public debt after implementation of October 26th Agreement (i.e. including the “Haircut” and PSI). 3) There will be no new measures with taxes. 4)-The Budget is based on rigorous numbers, not hypothetical data.

 Despite the forecast for fiscal improvement, the real economy will continue to move in conditions of extreme pressure and will continue harboring the strict austerity of the last two years, that directly reflects consumption and recession.

The Budget 2012 states that Recession (-5.5% in the current year, Budget 2011), will shrink further by -2.8%, unemployment will reach 17.1% , private consumption will decline by 4.1% and investment will fall by 7.5%. [How will a primary surplus occur? That’s probably a miracle!]
 

On the positive pages of the Budget 2012, there are estimations are exports to increase by 6.4%, reduction of imports at 2.8%, deceleration of inflation at 0.6% [which looks more like a deflation]On the field of tax revenues, an increase of 3,60 billion euro (€53,301 billion from €49,702 billion) with primary expenditure reduced by 2,745 billion euro (€49,702 billion from €51,830 billion).

In case the PSI  will take place, a gain of 4-5 billion euros is expected.

The Budget Deficit is estimated at -5.4% (with PSI) and at -6.7% (without PSI).

With the new taxation law a lot of tax-free reductions will be deleted.

 Tax for heating oil will come up on the level of fuel oil.

 Tax payers will be called to pay €2,5 billion more than in 2011, due to ‘solidarity tax’, reduction of tax-free year income down to 5,000 euro limit, cuts in tax-free expenses and annulment of tax benefits due to recipts collection.  Taxes for property owners will be increased by €2,65 billion due to ’emergency property tax’ via electricity bills (ones has to pay 2. installment of 2010, full tax for 2011 and 2012), the normal property tax of 2009, 2010, 2011 and the planned increases in ‘objective property values’. 

 So start saving money to pay 6-7 property taxes within one year and if you have no job or other income…. sell your property – some sharks are eager to buy.