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  • Loan tranche ushers in year of harsh austerity

    According to the compliance report by creditors which was leaked yesterday, Athens must go forward with 10,000 auctions of seized properties this year, and another 40,000 between 2019 and 2021.

    ΤοΒΗΜΑ Team

    The 6.7 billion euro loan tranche which was approve yesterday by the Eurogroup will be accompanied harsh austerity measures that will hit hard the already decimated Greek middle class.

    According to the compliance report by creditors which was leaked yesterday, Athens must go forward with 10,000 auctions of seized properties this year, and another 40,000 between 2019 and 2021.

    That means inevitably many primary residences of debtors will be auctioned off, something that could very well precipitate a strong social backlash.

    As previously reported, the tax-free ceiling on personal income tax will be lowered from about 8,700 euros to 5,700 euros in 2019, one year earlier than originally planned, but this is only if Athens fails to meet the 3.5 percent primary surplus target next year.

    That would mean a minimum of 650 euros in additional taxes for every taxpayer.

    There will also be a barrage of privatisation, as over the next several months the aim is to collect one billion euro in revenues from this source.

    The government is obliged to adjust real estate tax valuations, in most cases downward, to approach rock bottom market values, and if the resulting revenues after the adjustment do not mean targets, that spells a painful hike in ENFIA real estate taxes.

    Another requirement is to hike VAT tax on islands which had been given a temporary discount, in some cases because they have borne the brunt of the migration crisis.

    After the completion of the current bailout compliance review, the government must proceed rapidly with another 88 reform commitments, for the fourth evaluation, in order to complete the current fiscal adjustment programme by 20 August.

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