The major mistake of Mr. Tsipras

After toying with the refugee crisis and mulling over it for six months, the Tsipras government has lost the…

The major mistake of Mr. Tsipras | tovima.gr

After toying with the refugee crisis and mulling over it for six months, the Tsipras government has lost the post-electoral advantage of support that the Greek people provided in the September elections, but it appears to have finally decided upon its main economic policy.

Instead of a major and meaningful reform in social insurance, it decided taxes. This as purely to limit the political losses, because it regards pensioners are potential voters, so it decided to limit its interventions in the pension system and introduce direct and indirect taxes to cover a significant amount of the fiscal burden. You can read all about it in other sections of the newspaper to see for yourselves.

Mr. Tsipras and his government prefer to further burden the active forces in the economy and leave the main bulk of pensions unaffected. This choice is absolutely problematic. The government is overlooking the essence of the crisis, which for demographic and other reasons includes the pension system. At the same time, the government is aiming to cover the budget gap by cutting incomes and pressuring the liveliest section of the real economy, namely those in private sector and those actively participating in the real economy. This choice is fundamentally wrong and doomed to fail.

The choice to support the pensions against the countries active forces in the economy is having a devastating effect. The over taxation of wages and consumption and a powerful disincentive that is pushing away investments, financial activities and employment.

The government’s economic policy choices will bring on a new vicious cycle of retreat and recession. It will affect the economy as a whole and turn out to be harmful. This policy will affect the real economy, with the banking sector remaining problematic and the fiscal problem remaining active, since it does not address the rising cost of the pensions. It is a monumental mistake, which may turn out to be decisive for the financial developments and ultimately, the country’s path.

Antonis Karakousis

Originally published in the Sunday print edition

Ακολουθήστε στο Google News και μάθετε πρώτοι όλες τις ειδήσεις
Δείτε όλες τις τελευταίες Ειδήσεις από την Ελλάδα και τον Κόσμο, από
International
ΒΗΜΑτοδότης
Σίβυλλα
Helios Kiosk