The main interventions that will be included in the 2025 budget in relation to boosting incomes and reducing taxes and contributions were presented by the Minister of National Economy and Finance, Kostis Hatzidakis, speaking today at the Delphi Economic Forum.
At the same time, in response to a question, he announced that if providers do not reduce commissions on electronic transactions, then the government will intervene legislatively in this direction.
In particular, the 2025 budget will include:
– A 0.5% reduction in insurance contributions, at a cost of €215 million.
– The reduction, effectively abolition, of the business tax for professionals or self-employed tax, at a cost of €120 million.
– The permanent refund of the Special Consumption Tax to farmers, at a cost of €100 million.
– An increase in the student housing allowance (EUR 15 million).
– The increase in pensions, which, according to the well-known formula, is estimated at around EUR 400 million.
– The suspension of VAT on construction, at a cost of EUR 20 million.
These are, as Mr Hatzidakis noted, measures totalling €870 million. “We come from April and tell you with relative precision how we will move in 2025.
This shows that we have a staff that works systematically, taking into account the EU’s fiscal rules,” the minister said, adding that the target for the primary surplus next year will again be equal to 2.1% of GDP. “We will stick to the New Democracy’s election commitments.
We will continue our serious and responsible fiscal policy, which is the foundation for the overall effort in the economy,” he added.
Responding to questions in a discussion with capital.gr director Spyros Dimitrelis, the Minister of National Economy and Finance said, among other things, the following:
– On the international environment: ‘Greece is not in a fishbowl and obviously it is affected by developments But having gone through the pandemic crisis and the energy crisis, we have seen that the economy has withstood and we have much stronger growth rates than the eurozone average.
We are combining the obligations under the new fiscal rules, i.e. to keep the surpluses for the difficult years, with our own political will to have a stable, robust and responsible fiscal policy, as any prudent landlord would do.
It is precisely because we live in a volatile environment that we have to have surpluses set aside and use them in times of need.
– On investment and exports: In the coming months, a new institutional framework will be tabled to encourage business mergers and innovation through tax and other incentives. “We have a significant investment gap but also a very significant increase especially in Foreign Direct Investment where a 20-year record was set.
And in exports we have the highest growth of any country in the European Union in the last four years. We have not yet reached but we are approaching the European average,” he said.
Specifically, in relation to the criticism of the high participation of Real Estate in investments, the minister stressed that the percentage of investments in real estate as a percentage of total investments decreased in the period 2019 – 2023 to 35 % from 42 % under SYRIZA, while in the same period the corresponding percentage in the European Union was significantly higher (49.7 %).
– On anti-tax evasion measures and POS supplies. He said these are the most initiatives undertaken in modern political history which are already yielding results as an estimated 500 million additional revenue was secured in 2023 due to the expansion of electronic transactions.
Referring to the commissions imposed on these transactions, he recalled that in addition to the traditional systems, there are also direct payment systems, such as IRIS with zero commissions for citizens and very low commissions for professionals and traders.
However, he made it clear “that if there are no developments in the next period that we all hope for, there will be a legislative initiative to reduce commissions especially in small transactions”.
– On incomes and inflation. Hatzidakis recalled that the minimum wage – the figures are similar for the average wage – has increased cumulatively since 2019 by 27.7%, while inflation over the same period, including the estimate for 2024, is 16.5%. That is lower than income growth.
He stressed that this largely explains the electoral victory of New Democracy in 2023. “Of course, the economy has been affected by the crisis as well as by the unprecedented natural disasters,” the minister noted, stressing, however, that at the same time we are at the top of the European Union table in terms of GDP growth.
In the coming years, as will be reflected in the programme submitted to the European Commission, we will seek an average growth rate of 2.5%.”
Finally, in response to a question on political developments in relation to the European elections, Hatzidakis noted that New Democracy’s problem is twofold: on the one hand, that some in Greece (and throughout Europe) believe that these elections are not so important and on the other hand, that New Democracy is doing “dangerously well” in the polls.
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“We say that the European elections matter for the serious, high-level representation of the country in the European Parliament, especially after the problems Greece’s image has had in the past decade.
It matters who goes, we cannot export the picturesque to Brussels.
Moreover, European elections produce political messages. If a political mosaic emerges, it will be negative for the economy. The government will obviously pursue reforms ignoring the political costs, but the positive narrative that exists internationally about the economy will “water down”.
We got 41% in 2023 and since then I wonder what has gotten worse for the economy and the country as a whole.
I am not claiming that we are infallible and have done everything perfectly, but we need to take a more cool-headed and global view,” he concluded.
