The new excess of government revenues in the eleven months of January – November 2024 in relation to its objectives state budget of 2025 passed in Parliament, predicts higher primary surpluses for this year and next than official targets.

The increased revenues from the reduction of tax evasion and the consistently high growth rates of the economy feed on a permanent basis and at higher levels the positive fiscal result and widen the margins of the government’s actions for new tax reductions in the coming years. These are reductions that are expected to focus on median incomes of employeeswhile tax reductions will also be available to the lower income strata.

Based on this plan, the economic staff moves with regard to the tax policy that is expected to be implemented from 2026, but the crucial decisions are expected to be taken next year after there are clear indications about the path of revenues. In any case, as competent sources clarify, the first clear picture of the revenue path of the 2025 budget will be captured in the Spring after its execution is completed in the first quarter of the year. These data will provide the first safe estimates for the course of the primary surplus next year and the level at which it will be formed for 2024. This is an important milestone for the financial staff as based on the actual data they will be able to estimate the fiscal margins and to plan the new interventions to reduce taxes.

Today’s data creates optimism that 2025 will be another year of exceeding fiscal targets for the additional reason that a series of new measures to strengthen electronic transactions and other interventions to reduce tax evasion will start to be implemented from the new year, when will contribute to further revenue growth. The goal is for revenues from the reduction of tax evasion to reach 2.5 billion. euros on an annual basis from 1.8 billion euros this year. The goal is deemed entirely feasible based on the results so far on this front, according to sources in the financial staff. It is indicative, as noted by the same sources, the data of the European Commission which show the significant reduction of the VAT gap in Greece to 13.7% in 2022 from 17.5% in 2021, when in 2017 it was 29.1%.

Based on the indications so far the primary surplus for 2024 it is expected to be formed at levels higher than the 2.5% target foreseen by the budget. After all, the Commission in its latest forecasts places this year’s primary surplus at 2.9%. This overshoot to the extent reflected in the final figures combined with the first safe estimates for the primary fiscal outcome of 2025 for which the target is 2.4% will pave the way for planning the new package of tax cuts. The changes discussed in the Ministry of Finance will involve interventions in the tax scale with the addition of scales and rates that will aim to relieve middle-level incomes from salaried work. This is an indicative limit since no decisions have been made so far. These will also result in relief for the lowest incomes from salaried work.

Finally, changes are planned in proof of living with the aim of reducing them by 30% from 2026. These are changes in the way of calculating the living allowances for residences, I.X. cars and pleasure boats. Amendments to the minimum subsistence allowance provisions are also being studied.