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Greece got a plan: a “development model” named “Greece 2021”

Greece got a plan. A growth and development plan with the futuristic title “Greece 2021”, that is seven years from now. The plan was submitted by Finance Minister Yiannis Stournaras to Euro Working Group on Thursday in Brussels in the context with the Greek debt relief request. Here is to note that the development plan is the first after Greece sought the aid of the International Monetary Fund in 2010.

According to Greek media, the plan Greece 2021 foresees

  • tax decreases on corporate profits
  • decreases in social security contributions
  • tax cuts in energy
  • tax cuts in natural persons
  • a guaranteed minimum income for all jobless
  • changes in bankruptcy law

“Under the new development model, the role of the state should be radically renewed and will be limited to supervision , regulation and support of growth initiatives, while in terms production its role should be limited to the provision of social services , defense and public order .

The new development model means in practice a shift from the production of non- tradable goods and services to the increase of productivity , competitiveness and the promotion of  an export-oriented Greek economy,” notes economic news website .

In a section with title “Horizontal Policies” the development model foresees … radical and breathtaking reforms -we’ve heard many times before – like

  • fiscal consolidation
  • creation of a climate favoring investment climate and facilitating business
  • privatization of public properties
  • improvement of fiscal policies
  • increasing of labor market flexibility
  • emphasis on innovation
  • reorganizing of  public administration and improvement of public services
  • combating  corruption and enhancing the reliability and transparency
  • strengthening social cohesion

The ambitious model has no “Vertical Policies” section, but it states the sectors where the development model will focus.

These sectors are: tourism, food industry,  logistics,  research and technology innovation,  medicines,  building materials and metals, shipping and related services,  marketable services.

Tax reductions

The plan stresses that ” in conditions of severe economic crisis and the urgent need to save resources, tax reduction is difficult. However, as in the coming years  the economy recovers and measures to combat tax evasion will continue to produce results, a gradual reduction in tax rates will be implemented . “

In the first stage a gradual reduction will be implemented in the taxation of corporate profits. After the reduction of social security contributions that is already in implementation [note: will be implemented as of July 2014], the further cut of social security contributions will be taken into consideration.

Also, “reduction should be made in the indirect taxes on factors of production (i.e. energy ) in the context of liberalization and rationalization in the relevant markets.” At the same time , “targeted actions should be promoted to the ” relief ” of charges in specific economic activities , such as research and development and the gradual reduction of tax rates on individuals .” (via ProtoThema)

As I was wondering whether the new development model and the tax reductions will start to be implemented in 2021 or be concluded in 2021, a Greek internet user  shed a light into the dark corridors of governmental plans.

“tax reductions on corporate profits may start be implemented after 3-4 years, reductions on energy after 5-6 years and tax reductions on natural persons after 7-8 years.”

PS what makes me worry is that I see no “natural gas and oil resources” among  the development sectors…



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