May 31, 2023

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Excessive tax statements worry investors

Two days left Only until the elections and the citizens with them and with investorsThey know more or less what the parties’ pre-election programs include. They also know what they like, what worries them, excites them, or scares them. In the case of investors, this is not difficult to determine at all What worries them. Or rather, what worries them about the stock market and their investments.

The imposition of some “maximum profit rates”, the large increase in the tax rate on dividends distributed by companies, and extraordinary taxes on “excess profits” in some business sectors. All of these are clearly listed inside in the economic platforms of two of the three largest political parties (at least according to convergent estimates).

We’ll start where things are most straightforward, namely with the taxation of the dividends that companies distribute to their shareholders. his program Syriza – PS T providesDouble the percentage from 5% to 10% for the dividend Which exceed 50,000 annually and escalate it to 15% to get higher profits, but without explaining how the escalation will happen.

his program PASOK – Canal You expect an immediate tripling of the relevant rate from 5% to 15% It goes further, stating that it should gradually bring about the rates applicable to the taxation of wage-labour. It is clear that the implementation of these programs will reduce the final dividend yield of all companies located in our country.

In particular for publicly listed companies, it will make them less attractive to Greek investors, which will logically lead to a lower valuation, with negative consequences for the value of individual portfolios as well as institutional investors who manage the funds. Greek citizens, and not necessarily have a large financial space.

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Another point that investors and markets do not like at all is what has been said in taxing “ultra-profitable” companies in certain sectors of the economy. The SYRIZA-PS program states that “excess profits” of energy companies and refineries will be taxed immediately at a rate of 90%.

According to the party’s calculations, €3.5 billion will be collected from these extraordinary taxes, although some party officials have reported higher amounts. The program corresponding to PASOK – KINAL is slightly more general and refers to the extraordinary taxation of “super-profits” of banks and large corporations in the monopolistic sectors of the economy, without specifics about tax rates.

Investors don’t like high taxes, especially when they are out of the ordinary And it comes right after a long period of losing corporate years, which is true in the case of banks, or follows a severe loss period as in the case of refineries that were hit hard during the pandemic.

Another category of advertisements are those which indicate, directly or indirectly, To mandatory determination of profit margins for some companies. The SYRIZA-PS program foresees a 5% profit cap in the energy sector. The program corresponding to PASOK – KINAL implies the establishment of a cap on the price of retail energy, which will essentially mean an administrative limitation of the profitability of companies in this sector.

These two announced measures are perhaps the most worrisome because they entail a permanent restriction of the profitability of these companies, which will most likely limit the investments made by these companies. The lower the return on the new investment, the lower the probability of achieving it. Especially in the energy sector, this will have very negative consequences because our country needs very large investments in the context of the energy transition.

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InvestorsNot only the stock market, it sure is They are not happy at all Reading and listening to all this, since the possibility of these parties participating in the next government is not insignificant, in fact in the case of PASOK – KINAL it is considered quite possible.

However, apart from the negative consequences of the above obvious programmatic positions for the stock market and investors in general, extremely negative impressions and even greater anxiety result from the statements of some executives about what their party will do. These statements immediately caused a stir and were later denied by the party leadership. However, the concern remains, as investors, as well as public opinion, believe that in the event of power, such opinions will “go out the window”.

The most recent, but very characteristic example is the one that contains the statements of a high-ranking official from SYRIZA – PS regarding the possibility of restoring the linkage of the amount of insurance contributions for the self-employed with their income, which if done would bring a sharp increase in the insurance contributions of a large number of professionals for a long time.

The uproar caused the party boss to publicly deny the possibility, but many freelancers were certainly still upset. This example in particular may not be purely tax in nature and of investment interest, but sure It affects the investment climate Which makes many wonder what the party’s programs really are.

The good thing is that there is only one more day left until the election campaign and the chances of hearing anything that would cause concern or shock to investors and the market are somewhat limited. But this does not mean that they have forgotten what they have heard so far.

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