Greece lowers taxes to boost employment

Athens rises spending to strengthen the country’s defence capabilities as East Med row deepens

Greek PM Kyriakos Mitsotakis on Saturday announced a tax relief package to boost jobs amidst a downturn caused by the coronavirus pandemic, as well as rise in spending to strengthen the country’s defence capabilities. At his annual economic address in Thessaloniki, Mitsotakis said the government will end real estate tax in 26 islands and lower social security charges for workers and employers.

Greece’s economic recovery has ground to a halt after the coronavirus outbreak and measures to combat the pandemic. It slumped at an annual 15.2% clip in the second quarter in the face of the coronavirus shock. Dependent on tourism, the economy has been hard hit by lockdowns and travel restrictions. So far, government support including furlough schemes has contained the rise in unemployment, which climbed to 18.3% in June, the highest in 16 months.

Mitsotakis said all unemployment benefits would be extended by two months and terminate the so-called solidarity tax surcharge on incomes for one year in 2021. “Our priority cannot be other than safeguarding employment,” he said. He also said that in October the state would return 1.4 billion euros to pensioners, whose income was slashed during the debt crisis of the past decade.

Additionally, Greece plans to boost its armed forces amid tensions with neighbouring Turkey over energy resources in the eastern Mediterranean. The PM announced the purchase of 18 Dassault-made Rafale fighter jets, and said that Greece will start the process for the acquisition of four frigates and the upgrade of another four. The country will also purchase new weapons, torpedoes and missiles and revamp its loss-making defence industry. Over the next five years, the armed forces will also hire 15,000 staff, he said.

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