The government is planning new measures against inflation, after good progress for state revenues in the first half of the year, which is confirmed by the data of the Ministry of Finance.
In this context, the government economic staff are staking out funds from the budget in order toto prepare a safety net, especially for vulnerable social groups.
These are the potential Fuel Pass3, Power Pass 2, the Inflation Voucher and the Enhanced Heating Allowance. At the same time, it is not excluded that there will be a short-term intervention in terms of VAT on food, as tourism revenues are expected to exceed those of 2019, with a consequent increase in the available fiscal space.
Taxes on excessive profits
The measures in question will be financed mainly by the Energy Transition Fund, which draws funds from various sources, such as the surplus profits of energy companies that will be taxed at 90% based on the Regulatory Authority for Energy – RAE’s proposals, in order to return them as subsidies to consumers, with the more vulnerable being priority recipients.
Increase in revenue
It is worth noting that a huge increase of 17.3% was recorded in tax revenues in the first half of 2022. This excess over the target for tax revenues in the first half reached 3.642 billion euros, with the total amount reaching 24.731 billion euros, which shows that there are new possibilities for additional measures.
Compared to June, tax revenue was €4.117 billion, up €799 million or 24.1% over target, due to better performance in the current year’s tax collection as well as the collection of the second tranche of the ENFIA property tax (around 150 million euros) which was predicted to be collected in the month of October.
Returning benefits to citizens
Therefore, it inflation generates additional revenue, with the government in a position to return a portion of it’s extra earnings to citizens.
It is worth noting that 7 billion euros have already been allocated for fuel and electricity subsidies, from the Energy Transition Fund and from the budget. It is noted that according to recent announcements the fund for subsidizing electricity bills in July reached 722 million euros.
Prices
Meanwhile, futures prices for August and subsequent months are trading high, meaning the cost of subsidies will also soar.
For Greece, the facts are now known: every 10 euro increase in natural gas costs 400 to 500 million euros from the GDP. And for every 10 euro increase in the price of gas, the budget needs to shell out 300-400 million euros to balance electricity price hikes.
The financial staff has estimated that 1 billion euros are needed for the second half of 2022. The thing is that the government has made these calculations based on an average wholesale price for electricity at 225 euros / MWh and for gas at 100 euros / MWh, prices that do not correspond to today’s evolving price ranges.
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