FinMIn Tsakalotos: Reforms and higher employment helped boost budget revenues

The implementation of reforms and an increase in the number of workers by 250,000 helped the Greek government to overshoot budget revenue targets and generate the ‘excess’ primary surplus, Finance Minister Euclid Tsakalotos said on Thursday.

Addressing a parliamentary committee during a debate on the 2018 draft budget, Tsakalotos said an overshooting in budget revenue was not due to taxation but the fact that 250,000 more workers had entered the labour market, offering contributions of 472 million euros, and the reform programme being implemented. In this framework, Tsakalotos said that a measure for the voluntary disclosure of undeclared incomes was expected to raise 450 million euros in revenue.

The finance minister also noted the creation of new software allowing cross checks in state spending. He admitted that overtaxation followed by the distribution of a budget surplus was not the right solution and explained the reasons why the government was forced to raise taxes. “This happens, first because the IMF always underestimates the yield of measures and secondly because it does not count so-called parametric measures (revenue from tax evasion or higher revenue from VAT). We do not want this, but we have had a difficult time for these reasons,” he said.

Tsakalotos strongly criticised main opposition New Democracy for failing to make any proposals and asked for an open ideological discussion on the issue. He rebuffed opposition criticism that taxation was killing growth by saying that this was a view that investors did not share. “A reform for investments is not primarily focused on taxes…but to ensure that investments are not carried out in the way they used to be done. We want to avoid a strategy based solely on large projects, on cheap money that generated excessive production that was not in the right sectors, or with the right criteria; we want a different growth policy,” he said.

The finance minister noted that the 2018 budget established the conditions for an exit from the crisis and the memorandum; while acknowledging that “not everything is going well”, he also noted that “many things are going better and in the right direction”.