Sunday , July 21 2024
Home / News / Economy / ESM Regling: “Tax cuts to be coupled with bordering of tax base”

ESM Regling: “Tax cuts to be coupled with bordering of tax base”

“Greece’s economy – fulfilling expectations after the elections”? Clearly, a new government brings the opportunity to present new priorities,” said the Managing Director of the European Stability Mechanism, Klaus Regling during his speech at the Economist Conference on Tuesday.

Although the government has just been elected and details remain to be seen, what is currently known seems promising to the extent that the country respects the established surveillance framework and its programme commitments, he added and reminded the conservative government of Kyriakos Mitsotakis of its obligations.

The planned “reduction in tax rates” – top priority for ND government –  could be coupled with a broader tax base, Regling said, although the previous government of SYRIZA had legislation the abolition of broadening the tax base due as of 1.1.2020.

“Greece should make growth its top priority while at the same time maintaining the agreed primary surplus and fostering fairness across society,” Regling said adding “the fiscal surplus is – together with growth – the necessary condition for debt sustainability. Given this overarching objective of “promoting growth.”

Economic Policy Guidelines from EMS to Greece

  • First on structural reforms: reforms already implemented during the adjustment programmes, such as the labour market reform, should not be reversed. For example, increases in the minimum wage should be in line with productivity developments to maintain competitiveness.
  • Further structural reforms are necessary to improve productivity and competitiveness. This is particularly important given the poor demographic outlook for Greece. To strengthen productivity requires reforms to make the economic environment more business friendly, reduce the time needed to resolve legal disputes, and further improve the effectiveness of public administration.
  • Second: continue with privatisations and support the improved management of state assets. This is critical to building an effective corporate governance culture in Greece, and to attracting both foreign and domestic investment.
  • Third on banking: the resilience of the banking sector needs to be safeguarded in order to improve financing conditions and support growth. Greece needs a stable and profitable banking sector to support firms and households.
  • Fourth on fiscal policies: Any rebalancing of fiscal policies should be targeted to foster growth while safeguarding the achievement of the agreed primary surplus. A reduction in tax rates, for example, could be coupled with a broader tax base. Also, available fiscal room should be used for productive expenditures, such as public investment.
  • More broadly, policy measures should consider fairness across society. For example, social benefits should be targeted at the disadvantaged like the young and working age population, where the risk of poverty is high.

Regling had a private meeting with Prime Minister Mitsotakis

The Prime Minister stressed the importance of reforms that foster economic growth and give rise to new jobs as the central commitments of the new Greek government, and also reaffirmed that Greece will respect fiscal targets.

He also expressed his conviction that rapid implementation of structural reforms would pave the way for higher growth and additional fiscal space.

Both Mitsotakis and Regling underlined their joint commitment to continued and constructive cooperation in a climate of mutual trust.

Regling’s full speech here.

Check Also

Summer sales kick off in Greece on July 8

Summer sales in Greece kicked off on Monday, July 8 and will last until August …