Athens Digest 09.09.2019

• PM announces sweeping tax cuts for 2020 as Greece strives to regain credibility

• Clawback to be reduced for drug companies investing EUR 50 million

• EU official says surplus targets cannot be raised now but profits on bonds can be used for investments

• Government gets nod of approval after two months in office

# Outlining his economic program for next year on Saturday, Prime Minister Kyriakos Mitsotakis said that corporate tax will be slashed from the current 28-percent to 24-percent in 2020 and taxation on dividends will be halved to 5-percent. Addressing the Thessaloniki International Fair on a wide range of issues, Mitsotakis insisted that tax cuts and other financial reforms to tackle bureaucracy and attract investments must be introduced before Greece can ask creditors to get on board with lower budget surpluses. Moreover, he announced that the clawback will be reduced for all drug companies that invest at least EUR 50 million in 2019.

# The solidarity tax that was introduced at the height of Greece’s financial crisis and a levy on self-employed professionals will be slashed as of 2021 when there is fiscal space, according to Mitsotakis. Meanwhile, sources said yesterday that the cost of the measures announced for 2020 is EUR1.2 billion. The issue is expected to be discussed in mid September with technical teams and later with the heads of the institutions when they return to Athens.

# A senior EU official said on Friday in Brussels that the issue of reducing Greece’s primary surplus targets cannot be raised now, but noted that profits on Greek bonds can go to investments, as is envisioned in July 2018 agreement. He added however that in this case the ECB’ profits from Greek bond holdings (SMPs and ANFAs) will not be enlisted to erase equal parts of the debt. Consequently Greece’s debt sustainability report will be modified. The report is expected to be revised as Greece also intends to repay part of its IMF loans early. “The Greek representative mentioned this (at the ewg) and… the reception was rather neutral to positive,” the senior official said, adding that a formal request from Greece was expected. PM Mitsotakis said yesterday that Finance Minister Christos Staikouras will submit an official request at the next Eurogroup, on Friday.

On our Radar: Government gets nod of approval after two months in office according to survey
Ruling New Democracy enjoys a 16.1 point lead over main opposition SYRIZA, according to a survey of voter intentions by the Marc polling company published in yesterday’s Proto Thema newspaper. More specifically, 41.8-percent of respondents said they would vote for the governing center right party against 25.7-percent for the leftist opposition party. The center-left Movement for Change (KINAL) was in third (6.7-percent) ahead of communist KKE (5.3), nationalist Greek Solution (3) and the anti austerity party MeRA25 (3).  Moreover, 71-percent of those surveyed said they have a positive view about the government, with 49 percent saying they believed that the country’s fortunes will improve and 80-percent expecting ND to stick to its promises. Another 42-percent said the government had surpassed their expectations.