Greek Prime Minister Antonis Samaras yesterday announced cuts to unpopular taxes introduced at the height of the country’s debt crisis, in a bid to show the nation that over four years of austerity are finally nearing an end.
The Greek premier, whose conservative party is trailing in opinion polls behind the anti-austerity, radical leftist Syriza party, said a heating oil consumption tax would be cut by 30 per cent and a ‘solidarity tax’ would also be reduced.
The country has stabilised and is entering the path of growth
“This is the year that Greece has started to stand on its feet. It is still wounded, yes, but standing,” Samaras said in his annual state of the economy speech marking the end of the traditional summer break. “It is still wounded, yes. But its wounds are healing and it is looking to the future.”
Buoyed by improved investor confidence and signs of economic stabilisation, Samaras has pushed the country’s EU and IMF lenders to start rolling back austerity to kickstart growth and preserve the fragile political stability in Greece.
Greek officials brought up the issue of tax relief at talks in Paris this week with the lenders as part of the country’s latest bailout review, but there has been no confirmation yet they have agreed to the package. Samaras said details of the tax cuts would be presented in the country’s draft budget to be announced in October.
He also said a new taxation ‘roadmap’ would be unveiled in the future, with the maximum income tax cut to 32 per cent from 42 per cent and the corporate tax rate reduced to 15 percent from 26 per cent. A deeply unpopular property tax would also be cut, he said without providing any details.
The government yesterday also confirmed that Greece will show growth in the third quarter, its first quarterly expansion since the start in 2008 of a crippling recession that has wiped out nearly a quarter of the country’s economy.
Greece is expected to return to marginal growth this year after the six-year recession that has left more than one in four jobless and reduced household incomes by nearly a third.
“The country has stabilised and is entering the path of growth,” Samaras said.
Greece has staged an abrupt turnaround since nearly going bankrupt in 2012 and almost bringing down the euro with it. The country remains the eurozone’s most indebted nation with debt forecast to top 177 per cent of the economy this year, but it has largely managed to bring its finances back on track and posted a budget surplus before interest payments last year.
In a sign of improved investor sentiment, Athens also returned to bond markets successfully this year with two bond sales that raised a total of €4.5 billion. That is expected to be followed by another bond sale before the end of the year.