Greek Primary Surplus Seen 1B Euros

With international lenders pressing Greece to speed up delayed reforms and find a way to close a hole in the 2014 budget as big as 1.4 billion euros ($1.94 billion) the Finance Ministry said a primary budget surplus for 2013 may exceed previous forecasts and top 1 billion euros ($1.37 billion), as officials cited latest revenue and spending data.
Much of the primary surplus – which doesn’t include interest on the country’s staggering $430 billion debt, nor budgets for state enterprises, cities and towns, some military costs and social security – could also be eaten up by a court ruling that pay cuts to the military as part of austerity measures were unconstitutional and have to repaid, estimated at more than 500 million euros, about $685 million.
The primary surplus, which excludes interest payments, is being closed watched because twice-bailed out Greece is eligible for debt relief from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB).
The latest surplus forecast compared with an estimate of at least 812 million euros in the budget presented in December. The EU’s statistics agency Eurostat will pronounce in April whether Greece achieved a primary surplus in 2013.
Greece must reach an agreement with its international bailout creditors to get the next installment of its 240 billion euro ($328-billion) emergency loan package in order to avoid default in May, when it has to pay back bonds worth about 10 billion euros.
The primary surplus, which excludes interest payments, is being closed watched because twice-bailed out Greece is eligible for debt relief from the Troika once it reports an annual surplus.
The latest surplus forecast compared with an estimate of at least 812 million euros in the budget presented in December.
If the primary surplus holds up, and isn’t siphoned off, Samaras said he would use 70 percent of it to help people most affected by harsh austerity measures he imposed, directing it to social needs.
But another report presented by the Parliamentary Budget Office warned that the government can’t go back to the same well of workers, pensioners and the poor to tax them to pay for the 2014 budget hole.
The office’s analysts showed Greeks are far overtaxed compared to other EU countries. The highest Value Added Tax (VAT) in Greece stands at 23 percent, against 21.52 percent in the European Union and 20.45 percent in the Eurozone..
The highest income tax bracket for enterprises has a 26 percent rate, with the average EU rate at 21.84 percent and that for the Eurozone at 25.95 percent; the top rate for taxpayers amounts to 46 percent in Greece against 36.67 percent in the EU and 44.52 percent in the Eurozone.
The report adds that all tax increases since 2010 have created a major burden on households without helping reduce debt or helping the economy at all. That was because of tax evasion, the exhaustion of taxpaying capacity and the increase in unemployment which stands at a record rate, along with deep poverty, because of big pay cuts, tax hikes and slashed pensions.
The study said taxes on salaried workers and pensioners has gone up 700 percent since 2010, while the tax that the self-employed will pay in 2014 will be up to nine times higher than in 2010.
Property taxation has grown seven-fold within five years, as the total amount of tax real estate owners will pay this year will reach 3.5 billion euros ($4.78 billion), up from 500 million ($683 million) in 2009.