The government's road map for the next four years is expected to be presented by the Prime Minister from the stage of the Thessaloniki International Fair, which is not treated as the starting point of a new cycle of benefits, but as the milestone for the formulation of the government programme with a view to Greece in 2030. The main aim is to present a four-year programme on the way to the next national elections, which will attempt to combine tax reliefs and income support with the country's fiscal stability and European commitments.
The government's central political message will be that the benefits of economic growth must gradually return to society, with emphasis on business, freelancers and the middle class, pressed by the high cost of living.
The interventions will be shared on a four-year horizon, with priority being given to measures that have a high social and developmental footprint, but also fiscally manageable costs. For business and freelance professionals, the government account will be based on the gradual transition from high tax advance and horizontal evidence to a more proportionate tax system. For employees and pensioners, emphasis will be placed on permanent income increases. In housing, the direction will be to expand access to housing and increase the supply of available properties. The main body of measures is already in the Prime Minister's office, as most interventions have been finalised at technical level.
The total amount of interventions on the table is EUR 1.9 billion. However, not all measures are expected to be activated at the same time. Part of them will be included in the direct package of Thessaloniki, while the biggest tax and insurance changes will gradually be allocated over the next four years, depending on the course of the economy and the available fiscal margins.
Businesses and freelances in focus
The package for businesses and professionals is therefore formed around five key axes: reducing the advance tax, correcting and phasing out presumed income, abolishing the profit charge for legal persons, reducing insurance contributions and, in a second year, reducing the corporate tax rate.
A central place in government planning is occupied by freelance professionals, self-employed and small and medium-sized enterprises. They are a large social and professional group, in which the government records strong dissatisfaction, mainly due to the hypothetical taxation system.
The aim of the Maximus Megaron is to send a clear tax de-escalation message. The interventions will begin to be presented at this year's ITH, but their full implementation is expected to develop at a depth of four years, so that budgetary costs remain controlled.
The main measure will be the gradual reduction of the tax advance. Today businesses advance 80% of the next year's income tax, while for freelancers the figure is 55%.
The new model under consideration provides for a greater reduction for small and low-income enterprises. The scenarios presented include deescalating the tax advance for professionals close to or even below 40%. The intervention could be implemented gradually to reduce the direct loss of revenue for the state budget.
At the same time, significant changes are being prepared in the hypothetical taxation system, which concerns some 670,000 self-employed people. Long-term planning also examines the complete abolition of minimum imputed income, with gradual implementation over the coming years.
The total budgetary cost of such a change is estimated at around EUR 400 million. The government considers that the gradual withdrawal of the hypothetical system can be combined with the strengthening of the electronic controls of the ADE. Electronic books, automated transaction crossings and increased access to economic data can be the key tools for tackling tax evasion, without horizontal imposition of imputed incomes.
The same package includes the abolition of the benefit charge for legal persons. This is an intervention with economic and also strong political symbolism, as it concerns a memorandum measure that continues to be imposed, regardless of whether a company has profits or losses. The annual financial cost of the abolition is estimated at close to EUR 240 million.
The reduction in the tax rate on business profits from 22% to 20% is also considered in the next phase of the four-year period. This intervention is not considered certain to be included in the direct package of the ICU, but remains in the wider planning to enhance competitiveness and investment.
More mature is the new reduction in insurance contributions. The aim is to further reduce non-wage costs, strengthen the creation of new jobs and improve conditions for firms wishing to increase employment.
Wages and pensions
An important part of the plan concerns employees and pensioners, as maintaining inflation at relatively high levels limits the real value of income increases.
Different scenarios with a horizon of 2027 and the next government period are considered for the minimum wage. The 1,000-euro target is on the table, while it is considered likely that the bar will be higher than the 950 euros, which constituted the initial government commitment to the end of the current period.
Pensioners are looking at an increase in the annual allowance from EUR 300 to EUR 400. At the same time, individual provisions of the insurance system, including the Solidarity Contribution, are reviewed.
The abolition of the personal difference from 1 January 2027 will allow some 400,000 pensioners to participate normally in the annual increases.
New package for roof and rent
The housing problem, along with accuracy, is one of the most difficult fronts for the government and is expected to be at the heart of the announcements of Thessaloniki.
The measures under consideration include new reductions in the ENFIA, tax reliefs on rent income and the creation of a new home-type housing programme with more flexible income and age criteria.
The design is not limited to strengthening demand for housing purchase. It also includes interventions to increase the offer of real estate for long-term lease, return of closed houses to the market and limit undeclared rent income.
For this reason, tax reliefs to owners are considered to be linked to specific conditions, such as the statement of the actual lease, the conclusion of long-term contracts and the return of closed dwellings to the market.
