With the aim of stimulating disposable income and reducing inequalities, the government as described in the budget submitted this morning to the Parliament, a series of measures were taken, from the first half of 2023 and they continue to be implemented.

Specifically:

  • the reform of the special salary of the NHS doctors with a weighted average increase of 10% and a cost of 92 million euros for 2023 and 65 million euros for 2024 and thereafter,
  • the abolition of the solidarity levy for civil servants at a cost of 202 million euros per year and to pensioners at an annual cost of 274 million euros, which were established following the permanent abolition of the solidarity levy in the private sector,
  • the arrangement salary requests of the Armed Forces at a cost of 58.5 million euros per year,
  • the abolition of the special contribution of 1% in favor of the Social Insurance Institution with an annual cost of 80 million euros,
  • the payment in March 2023 one-time financial support of 200 to 300 euros to pensioners who did not receive an increase in their pensions in 2023 due to a personal dispute, at a cost of €280 million;
  • the increasing the duration of maternity pay in nine months for women employed in the private sector at a cost of €64 million per year and
  • the increase in OPECA and EFKA disability benefits by 8% from 1 May 2023 at a cost of €63m for 2023 and €95m for 2024 and onwards.

In addition, in April 2023 the minimum wage was increased to 780 euros from the amount of 713 euros.

After the double elections of May – June 2023, the formation of the government in June 2023 and the programmatic statements, a network of interventions was announced, covering the second half of the year 2023 and 2024, to stimulate disposable income and reduce inequalities.

In particular, the following measures were foreseen:

  • it is reformed public sector payroll to strengthen incomes in the public sector, to support to a greater extent low-paid civil servants, families with children and those who hold a position of responsibility in the State (total budgetary cost 25 million euros for 2023 and 931 million euros for 2024) . The main interventions concern the horizontal increase of 70 euros in the basic salary, the increase of the family benefit from 20 to 50 euros per month, the increase of the allowances of the position of responsibility by 30% and the increase of the border allowance and special working conditions for the members of the Armed Forces and the Security Forces. At the same time, the salary of faculty members increases as well as the travel and overnight expenses of civilian and uniformed personnel,
  • increases with an annual cost of 7 million euros were instituted for the readjustment of special category pensions which fall under the jurisdiction of the Ministry of National Economy and Finance – GLK. Due to the retroactive effect of the regulation, depending on the category of pensioners, the fiscal cost is estimated at 5 million euros for 2023 and 56 million euros in 2024,
  • a permanent provision of 150 euros is instituted for the realization of purchases by companies active in the fields of culture, tourism and transport, in the context of the financial support of approximately 200,000 young people aged 18 and 19 (total budgetary cost of 31 million euros for each of years 2023 and 2024),
  • an extraordinary aid of 100 to 200 euros is provided in December 2023, with a budgetary cost of 107 million euros, for the financial support of approximately 750,000 pensioners with pensions of up to 1,600 euros who have a personal difference of more than 10 euros;
  • the complete exemption of approximately 200,000 former EKAS beneficiaries from their participation in pharmaceutical expenses is made permanent (fiscal cost of 38 million euros per year),
  • the minimum guaranteed income for the income support of approximately 225,000 vulnerable households increases by 8% from December 2023 (fiscal cost of 4 million euros for 2023 and 43 million euros for 2024);
  • the maternity allowance is extended from 2024 to the self-employed and farmers to nine months, to deal with the low birth rate and to support the family, following the already institutionalized increase to nine months for employees in the private sector (fiscal cost 40 million euros for 2024),
  • The doubling of the successful “MY HOME” program is foreseen with an additional 375 million euros in the form of loans, to deal with the particularly intense housing problem, especially for young people and to support family planning. It is noted that the total budget of the program amounted to 1 billion euros, of which 750 million euros come from DYPA’s cash reserves and the rest from the banks,
  • retroactively increases from July 1, 2023 the flight allowance for pilots and crews of firefighting aircraft, with a budgetary cost of 700 thousand euros per year and
  • financial support is provided during the month of December 2023 to vulnerable households, which includes the beneficiaries of the OPECA child allowance (one and a half monthly installment), the beneficiaries of the OPECA disability allowance and e-EFKA (200 euros), the beneficiaries of the minimum guaranteed income (50% of the monthly installment), low pensioners without personal difference with main pensions up to 700 euros and uninsured elderly (150 euros). The total number of beneficiaries is estimated at 2.3 million, with a budgetary cost of 352 million euros.

In addition to the above fiscal measures, the following interventions are applied to the labor market and the pension system:

  • from January 2024 the three-year freeze on employees is lifted,
  • the 30% reduction in pensions for employed pensioners is abolished and replaced by a 10% contribution on the additional remuneration they receive from their work and
  • pensions are increased again from 1 January 2024 by the average of GDP growth and inflation 2023, with an estimated cost of 430 million euros.

In addition, interventions of a fiscal nature concern:

  • to the increase of the tax-free allowance by 1,000 euros for taxpayers with one or more dependent children (fiscal cost of 135 million euros for 2024),
  • to the reduction of ENFIA by 10% for houses insured for natural disasters (fiscal cost of 26 million euros for 2024) and
  • in reforming the capital market’s operating framework with significant investment and tax incentives:

a) reduction of the fundraising tax from 0.5% to 0.2% (annual fiscal cost of EUR 22 million),

b) a 50% reduction in the stock exchange tax (annual fiscal cost of 21 million euros) and

c) abolition of the bond interest tax on government and business bonds (annual fiscal cost of 7 million euros).

Permanent VAT reduction

In addition, from January 2024 it is expected to fixed the reduced VAT rate applied since the Covid-19 pandemic to transport, gyms and dance schools, cinemas and a range of public health-related goods, at an estimated cost of €305m per year. These categories concern urban, suburban, land and rail transport, sea and air transport, gyms and dance schools, cinemas and zoos and a range of goods related to public health, including personal hygiene and protection , hemodialysis, hemofiltration, hemodialysis and plasmapheresis filters and lines as well as defibrillators. In addition, the reduced rate of VAT on coffee and taxis is expected to be extended for the first half of the year 2024, with an estimated cost of €77 million over six months.

The reduced rate is not expected to be extended to non-alcoholic beverages served, with an estimated saving of €37 million per year. The total fiscal cost of the above extensions is estimated at 382 million euros for 2024.

Additionally, with the aim of regulating the short-term rental market and addressing the secondary negative consequences on the real estate market and rents, the obligation is introduced for natural persons who have three or more properties on short-term lease to start a business activitywhile the income obtained by the legal entities and the above natural persons from the short-term rental of property, is considered income from business activity and is subject to VAT and non-resident tax.

In addition, the definition of short-term rental as well as the fines for not being registered in the Short-Term Property Registry are being tightened.