More tax cuts can be expected as of next year and will likely be reflected in the Midterm Fiscal Strategy Program 2022-25 that the Finance Ministry is about to table in Parliament, possibly within this week. However, there is little scope for generosity due to the need to keep the debt at sustainable levels after the pandemic.
Sources say that the high primary budget surpluses projected for 2024 and 2025 should create some fiscal space, provided the surplus target remains at a reduced level, as expected.
Provisional ministry estimates point to a margin amounting to 1.3% of gross domestic product in 2025, though that will also have to cover the cost of rendering permanent the currently temporary breaks – i.e. the reduction of social security contributions and the solidarity levy.
Consequently the margin left will come to some 0.5% of gross domestic product, ministry officials estimate, which based on the current GDP level comes to about 900 million euros.
The midterm program will provide for a primary surplus of 2% in 2023, rising to 3% in 2024 and to 3.5% in 2025, based on the projected growth rates.