Lenders-Greece talks: business as usual with Pension Cuts & Tax Hikes for low & medium incomes

For Greece’s lenders faith was apparently stronger than an agreement on bailout program review, the pensions reforms and the new additional taxation. They left Athens on Sunday and will return beginning of April, after a two weeks break for the Catholic Easter.

The representatives of the “institutions” left and left behind the pieces: more cuts in Greek pensions, additional taxes. The Greek government will have time until middle of April to “sell” this new deal to citizens and voters in the old usual way: it’s good for the country – even though bad for the citizens with 1/3 of them struggling with poverty.

The bill is expected to be paid by the low and medium incomes for one more time, since 2010.

Greek media report that the deal between lenders and Greek government has struck with

National Pension at 384 euro gross (and not below as the lenders wanted)

Cuts in pension above 1,400 euro gross (every cut in pensions takes into consideration the original pension amount when somebody retired and not the latest pension stand after several cuts. For example: pension of new pensioner in 2010 was of 1,250 now is around 950 euro).

Tax Hikes

Tax will increase from 22% now to 22.5% for annual incomes of 20,000 euro.

Taxes will raise from 22% to 29% for incomes 20,001-25,000 euro, from 32% to 37% for incomes 30,000-40,000, from 32% to 45% from 40,001-42,000 euro and from 42% to 45% for incomes above 42,001 euro.

Tax-free ceiling of 9,545 annual income to come down to 8,888 euro.

Tax-free ceiling of total 2,200 euro will come down to 2,000. In addition a further deduction of 100 euro for every 1,000 euro income for annual incomes  20,000-40,000 euro.

The issue of cuts is not 100% over yet. There is also talk for raising the so-called “Solidarity tax”, a tax imposed temporarily in 2011 with the aim to support impoverish households. However, the revenues of this tax most likely disappear in the black hole of Greek debt.

Talks are expected to resume on April 4th, the same day the returns of refugees and migrants to Turkey are expected to begin.

Signs from Brussels hint that when program review concludes talks about debt relief in terms of lower interest rates and extension of repayment period may start.

At the end of talks with lenders and EU-Turkey deal, we will see the German original plan for Greece  “stem refugee flows vs debt relief” to materialize. In case, you have forgotten: this was the plan of Chancellor Angela Merkel and her party CDU from the very beginning. [sorry, I can’t find link to one of older KTG’s post with CDU-official signaling this]

It’s only that PM Alexis Tsipras does not officially admits that he accepted “at least 50,000 refugees and migrants to be trapped in Greece” for the exchange of Debt Relief.

PS annual income of 9,545 euro gross is below 800 euro per month gross. net is even lower. With majority of households having at least one unemployed member.