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Enfia property tax cut set for 2022 as part of PM's growth plan

Greece's Prime Minister Kyriakos Mitsotakis introduced a series of tax cuts over the weekend to support the country's post-pandemic recovery as he revised sharply higher the government's growth forecast for the economy this year.

A stronger than expected rebound by the Greek economy in the second quarter of the year, where GDP shot up by 16.2 percent from last year’s levels, has helped created the fiscal space for handouts as households and businesses are still hurting from the country’s ten year economic crisis. Greece was emerging from the debt crisis when the pandemic hit at the start of last year, sending the economy back into a downward tailspin.

In delivering a keynote economic speech at Thessaloniki, northern Greece, the premier said that Greece has the ability to deliver the cuts without facing the risk of fiscal derailment.

“As the economy grows, the dividends must be reaped by the people. We will support our fellow citizens who are in need of it,” said the Greek premier.

“The wealth that will be created will be redistributed in a fair way," he added.

Among the changes being delivered are subsidies for young workers and steps aimed at promoting job growth. Unemployment in the country is at 15%.

Newly hired young people up to 29 years old, without previous working experience, will be subsidized for 6 months by the state with 1,200 euros upon their first recruitment. 600 euros will be given to employers, and the remaining 600 euros will be given to the young workers on top of their salary, explained Mitsotakis.

Moreover, as of 2022, subsidized new jobs will increase to 150,000 from 100,000, while student housing allowance will be extended to students at private postgraduate educational institutions for vocational training (IEK), he noted.

Other changes include workers in the private sector staying exempt in 2022 from paying a solidarity contribution tax, while a reduction of 3% in social insurance contributions for these workers will continue in 2022. Business tax will be lowered to 22% from 24%, while capital raising tax is being reduced by half.

In the real estate sector, Mitsotakis said that the inheritance tax on assets worth up to 800,000 euros will be abolished and that the ENFIA property tax will be lower for most home owners as of next year.

He did not provide details of the ENFIA tax cut, saying that details would be outlined when the government submits a draft of the 2022 budget in parliament later this year.

In regards to Greece’s growth target for 2021, the figure was revised to 5.9% from 3.9% previously as stronger consumption and a better-than-expected year in tourism improve the economy’s prospects.

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