A law passed last month granting debtors 72 to 100 installments to pay off their outstanding obligations to the state is to be changed to reduce its fiscal impact and meet the demands of the troika, it emerged on Wednesday.
The decision to change the law was taken at a meeting between Prime Minister Antonis Samaras and Deputy Premier Evangelos Venizelos. It represents a major climb-down for the government as it had held up the legislation as a sign that the burden on hard-hit taxpayers was easing. Even a few hours before the decision was taken, the general secretary for revenues, Katerina Savvaidou, insisted that the law would stand as it had passed through Parliament last month.
However, Article 51 of the legislation will be changed so that any debts which are not overdue, which could include the first installments of the ENFIA property tax as well as income tax, will not be included in the payment plan on offer to taxpayers who are in arrears.
A few days ago the troika supplied the government with a list of 19 actions that it wants Athens to carry out in order to conclude the review of the Greek program. One of the demands was for the law on debts to the state to be withdrawn. Greece’s lenders believe that it could lead to as much as 1 billion euros being added to the fiscal gap for next year. The government hopes that the changes agreed on Wednesday will be enough to appease Greece’s creditors.
Finance Ministry sources said that the amendment would be submitted to Parliament “within the next few days,” possibly before the end of this week.
Samaras and Venizelos also agreed on Wednesday to meet another of the troika’s demands, which is to reduce non-wage costs in the public sector, such as payments for travel and mobile phone usage. Work is already under way on producing a new pay structure for the civil service, which is another of the items on the troika’s list.
Greece’s lenders have further demanded that the government remove limitations to primary residence foreclosures at the end of this year. Ten New Democracy MPs submitted a proposal to Parliament for the moratorium to be extended, underlining the internal resistance that the coalition will face on this issue.