Passing the fiscal bill to the next government

A truly chronic occupation of Greece is the mentality of taking into information lone the abbreviated term, which not lone survives, but has acquired unprecedented dimensions successful caller years. Especially successful the tract of fiscal policy, it has consequences that spell beyond the existent authorities term and will beryllium inherited by the adjacent administrations, which will beryllium called upon to look a trio of interconnected problems: the hesitance of planetary markets to lend to states, the financing spread aft the extremity of the EU’s magic wealth tree – that is, the EU Recovery and Resilience Fund – and the consequences of fiscal adventurism, the essence of which consists of a time-honored money-for-votes mentality with short-term targeting: a emergence successful the polls and electoral victory.

These goals are served by overtaxation and surpluses that make the representation of bully management, connected the 1 hand, and the instrumentality of portion of the gross to constituencies successful the signifier of idiosyncratic benefits, connected the other. What bash the information say?

They accidental that successful 2023 the government’s target was to execute a superior surplus of 1.6 cardinal euros, but successful the extremity it reached €4.6 cardinal – that’s €3 cardinal supra the target. Last year, the target was a superior surplus of €5 cardinal oregon 2.1% of GDP, but successful the extremity it reached €11.4 cardinal oregon 4.8% of GDP – €6.4 cardinal supra the target. Where did this excess travel from? Mainly by surpassing the target for tax revenues. Total tax revenues exceeded the government’s target by €4.8 cardinal successful 2023 and €5.8 cardinal past year, cumulatively exceeding €10.6 cardinal successful two years. In particular, VAT revenues exceeded the target by €3.2 billion, while those from idiosyncratic income tax (due to non-indexation of the scale) by €2.1 billion. This year’s information constituent successful the aforesaid direction.

What is the crushed down this jump? It is not owed to the summation successful GDP because, simply, successful 2024, GDP maturation was 2.3%, 0.6 percent points little than the 2.9% forecast successful the budget. Part of the accrued gross is owed to the interconnection of currency registers with POS machines and the simplification of tax evasion – though it remains very precocious by European standards. And another, ample portion is owed to the overtaxation of the aforesaid tax payers, done inflation.

How are these accrued revenues utilized? They are not used to upgrade nationalist infrastructure. The purse does not unfastened for them, neither for education, nor for wellness (after all, these are systematically assigned to backstage speculators), not adjacent for Attica, where, with the existent infrastructure, if different Storm Daniel hits, we will mourn galore victims. These revenues are used arsenic “benefits,” hoping to amended electoral performance.

This short-term readying has marked fiscal policy. With the authorities celebrating the precocious surpluses and with clientelistic distributions of this “surplus,” the state is being dragged into the post-2026 era, when, arsenic everyone predicts – the European Union, the International Monetary Fund, the government’s Medium-Term Program – that unless a occurrence happens, economical maturation rates will driblet to the portion of 1%. And then, with such debased GDP maturation rates, the adjacent governments will person to bash some magic tricks to proceed paying the state’s regular expenses, paying disconnected the nationalist debt, and the installments for the weapons purchases that are being made today.