The one, optimistic side of the 2018-2022 medium-term fiscal programme that was revealed yesterday is that the 3.5 percent primary surplus target is not considered merely a given, but rather will be overreached in a brutal manner.
The other side, which concerns us all, is that success in reaching the target is based largely on over-taxation. It is indicative that the average annual rate of increase of direct taxes of individuals and legal entities exceeds five percent.
In other words, the effort to meet fiscal targets is not based on the reconstruction of the productive base of the economy, but rather on an annihilating pace of taxation, so that the government can boast that it can distribute some crumbs and pretend that it is the protector of the weak.
It is indicative that the Fiscal Council recognises that the taxation torrent cannot be withstood, and it is recommending corrective measures to redistribute the tax burden “in a manner that offers partial relief from taxation fatigue”.
It is by now obvious that the taxes that were imposed over the last years not only were far greater than citizens and businesses could bear, but their results were systematically downplayed. Despite the fact that a large number of taxpayers find it impossible to pay their debts, those who pay in the end over-reach the targets.
Still, even when the government has an obligation to adjust taxes to the real situation of the economy, as is the case with the ENFIA real estate tax, it manages artfully to increase taxes instead of lowering them.
As Finance Minister Euclid Tsakalotos conceded yesterday, with the forthcoming adjustment of real estate tax valuations, 15 percent of the citizenry will pay higher taxes. Who they are will be revealed when the tax bill comes.
It is by now crystal clear that over-taxation is a basic policy choice of the Tsipras government.
On the one hand it exhausts broad swathes of Greek society, the former middle class, so that on the other hand it can maintain a clientelistic network, handing out paltry benefits to those who have reached an economic impasse.
This policy may suit petty partisan objectives, but it cannot provide the required impetus for the economy and the country to develop.