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Greece draft budget 2023: Lower taxes, extension of lower VAT to products, services

Greece’s draft state budget for 2023 is expected to be finalized this coming week, before its tabling in Parliament on October 3.

Basic features include lower taxes for citizens, particularly for pensioners and civil servants, by abolishing of a solidarity tax, and increases in salaries. The revenues lost will be replaced exclusively by the growing economy and control of tax evasion.

The draft budget also foresees a primary deficit, but its estimate will not be finalized until the European Union decides on whether to continue with an escape clause, due to high inflation and large fiscal necessities of supporting society.

Finance Ministry sources said the government needs to balance the need to support citizens with the need to appear fiscally responsible to international markets, as its goal is to become investment-grade within 2023.

Recent statements by Finance Minister Christos Staikouras revealed that the GDP will increase by 5.3% this year (from 3.1% foreseen in the budget), against 3.1% of the EU average, while the economy’s growth will settle at 2.1% for 2023 against the EU average of 0.9%.

The total amount of interventions is 3.2 billion euros.

This includes abolishing a solidarity tax on all revenues as of January 1, 2023 (1.24 billion euros); raising main pensions of 1.5 million pensioners by 6% (at least 600 mln euros); tax cuts for businesses hiring more full-time people for at least 3 months (introduced already on Sept. 1); a 50% in subsidies for student housing; extending low VAT to transport, coffee, non-alcoholic beverages, gyms, dance schools, films and tourism packages to June 2023 (246 mln euros); and continuing, if circumstances allow, the subsidy of heating oil by about 0.25 euro/liter into 2023, beyond its current expiration at the end of 2022.

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