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Mitsotakis pledges €2bn tax reductions program, reduce primary surpluses

The International Fair of Thessaloniki is the place where fairy tales are born and quickly spread through media. A week after Prime Minister Alexis Tsipras announced a series of relief measures including tax cuts, it was the turn of Kyriakos Mitsotakis, leader of Greece’ main opposition party  conservative New Democracy, to announce his own package of measures.

He pledged to drastically cut taxes, immediately abolish capital controls and even convince creditors to reduce the agreed primary surpluses. All these will happen when he becomes prime minister – something he considers as 100% certain when next parliamentary elections take place.

“Income tax for people earning up to 10,000 euros will be lowered to 9% from 22% today. Value Added Tax in the catering sector will be cut to 13% from 24% currently. The extra annual levy of 650 euros for self-employed will be gradually abolished, and the property tax ENFIA will be cut by 30% in the first two years of New Democracy in power,” Mitsotakis pledged from the Vellidio Hall where he held his speech on Saturday evening.

He pledged to reduce VAT for touristic packages that include accommodation and catering to 11%, and suspend VAT in the constructions activity for three years.

Tax rates for corporate profits will be reduced to 24% from 40% currently, he announced.

On social security contributions for main pensions, he said that he will decrease contributions to 15% from 20% currently.

“Greece can grow with average rate of 4% in the next ten years and the debt will be drastically reduced,” he said.

He pledged that his party will crack down on debtors who refuse to pay back loans, yet he did not elaborate whether New Democracy would go after ND for the several millions euros it owes to banks.

He said that that Greece’s current program implemented with the country’s creditors’ signature is “wrong and destructive” and pledged to “cut the noose that strangulates Greece.”

Mitsotakis described the Macedonia Agreement between Greece and FYROM as “shameful” and reiterated that his party will down vote it when it comes to Parliament. He said he will renegotiate the deal form scratch, if the Parliament down votes it. During his presser on Sunday, he said though that he will implement the agreement if it has passed in the Parliament.

The leader of ND did not elaborate about the cost of all these direct and indirect taxes and contributions cuts.

Neither did he explained how the primary surpluses will be achieved for the next  10 years or how the missing revenues will be replaced.

On Sunday during a live press conference said about the cost of his program “we have said in the past it is calculated at 2 billion euros that will come from state expenditure cuts.”

He did not go into details but said “this will not mean that we will downgrade the services to the citizens.” He most likely meant that expenditure cuts will be the sense of mass lay-outs especially for those with temporary work contracts, as he did in his role of Public Administration minister 2012-2014, and as one high-ranking ND official said on Saturday.

Mitsotakis added “we will convince our partners [creditors] to reduce the primary surpluses.”

He forgot to mention that he cannot abolish the capital controls just like that with a simple government decree but that abolishing capital controls will be the normal development of the relevant road map.

Should all things progress as planned the last pillar of capital controls, that is the trasnfer of capital abroad, may be lifted in 2019.

If Mitsotakis is lucky enough, he can cheer “I abolished the capital controls!” the next day Greek voters decide he has earned to be the next Prime Minister. However, this will not be his achievement.

PS I am convinced that if competition between Tsipras and Mitsotakis continues at this speed and level, by next elections some time in 2019, they will have both promised Greek voters that taxation rates at ZERO percent.

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