Greece's 2026 Budget Paradox: Rising VAT Revenues Amid Slowing Inflation and Weak Consumption
Greece's draft budget for 2026 reveals an apparent paradox: the government expects a notable increase in revenues from Value Added Tax (VAT) even as both inflation and private consumption are projected to slow. According to the Finance Ministry, VAT receipts are expected to reach €29.13 billion next year, up from €27.53 billion in 2025 - an increase of about 5.8%. This rise comes despite forecasts that private consumption will grow at a slower pace, from 1.9% in 2025 to 1.7% in 2026, while inflation is set to ease to 2.2% from 2.6% this year. Officials attribute this apparent discrepancy to changes in consumer spending patterns and an increase in nominal incomes. The ministry argues that higher earnings will likely be directed toward goods and services taxed at higher VAT rates, boosting state revenues even without a surge in overall consumption. However, this expectation depends heavily on continued employment stability and...
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