Spending on public salaries and pensions in Greece exceeds 40 billion euros, absorbing a very large share of total income from taxes and insurance premiums.

Excises on fuel account for about 8% of the country’s total tax revenue, while VAT on food has become more than 10% of value added tax revenue and certainly more than all of ENFIA.

The state budget is based on announcements of tax cuts and increases in benefits, wages and pensions. The implementation of the promises is in conflict, on the one hand, with the obligations assumed by the country to fulfill budgets with a high primary surplus as long as the debt remains at a high level, and, on the other hand, with the “features” of Greece: limited declared income (such thus, little taxable material), high reliance on indirect taxation, but also high pension costs.

• VAT on food – both due to rising prices and sectoral inflation is still in double digits – it now brings in about 2.8 billion euros a year and has become one of the main sources of income for the country. Suffice it to say that the total amount of 6.1 million individuals and 64,000 legal entities certified under ENFIA this year amounted to 2.27 billion euros. A reduction in the VAT rate on food does not easily lead to an increase in consumption, since demand is practically inelastic. Thus, any interference on this “front” must be covered by other sources of income. Whether any reduction in VAT will affect the final retail price is highly questionable as it depends on the relationship of the manufacturer, wholesaler and retailer. Also, any benefit is horizontal to consumers regardless of their income and regardless of whether they are permanent residents of the country or tourists.

• excise tax on diesel, it brings in 1.5 billion euros per year, while EFK adds another two billion euros to gasoline. Together with excise taxes on heating oil, the total amount is close to 4 billion euros. Of the 100 euros in taxes collected by the state, about 8 euros are excise taxes on energy. Therefore, any intervention has very high financial costs. The consequences of lower excise taxes on fuel are far-reaching and immediate:

1. VAT charges on fuel are also reduced as 24% is also subject to excise tax.

2. The discount is automatically applied to the retail price.

VAT on food is currently around 2.8 billion euros per year and is one of the country’s main sources of income.

3. A price decrease may lead to an increase in consumption, but this, in turn, will negatively affect the country’s trade balance, since all fuel is imported from abroad.

In Greece, the excise tax on unleaded lead is as high as 70 cents per litre, almost double the minimum rate in the EU. (35.9 minutes).

In diesel it is 41 minutes versus 33 minutes in the EU. and heating oil in 28 minutes compared to 2.1 minutes in the EU. Therefore, any reduction should take into account not only the budgetary cost, but also the wider implications as Europe moves towards additional taxation of fossil fuels.

Salary and pensions

Despite the “freeze” of wages in the state and the reduction in overall costs due to the application of the “less hires compared to layoffs” rule, the total available fund is close to 13-14 billion euros per year. Thus, approximately 130 million euros are required for each unit of horizontal wage increase.

Of course, a significant percentage of the original amount of wage increases in the state is returned to the state treasury. On the one hand, because employees pay more income tax and insurance premiums, and on the other hand, because the net amount that will remain for the employee will be directed towards consumption and will be taxed. Obviously, the higher the percentage of the increase, the higher the fiscal cost, with the decisive factor for the size of the bill being whether there will be a one-time salary adjustment or whether the adjustments will be made on an annual basis. based on inflation.

Pension spending currently exceeds 27-28 billion euros, and in any case, the law provides for their increase in the coming years based on the sum of inflation and economic growth. Under current legislation, the increase would cost – at the budgetary level – €450 million in 2024, €800 million in 2025, €1.1 billion in 2026 and €1.5 billion in 2027. The current legislation does not provide for promotions are given to those with positive personal differences, so if this changes, the financial cost will be even higher. As for the 13th pension, it requires a place of 1 billion euros. 2.5 billion euros in fiscal costs for horizontal closures and arrears in pension payments retroactively.

To reduce the premium calculation factor by one percentage point, 500 million euros would have to be found, and the fiscal cost of canceling the claim fee agreed by both major parties is 440 million euros. High fiscal costs are associated with interference with distributed goods. The child allowance alone is currently worth around 1 billion euros, while the rent allowance is 400 million euros per year.