Fearing the very real prospect of crushing defeat in four upcoming elections – parliamentary, municipal, prefectural, and European Parliament – the government is in the midst of a frantic effort to shift the political agenda and turn the tables on the opposition with a spate of social benefits and handouts.
To serve that strategy, the government wants to avail itself of the fiscal space it believes it has created by exceeding primary surplus targets agreed to with creditors, but the existence of that space is in fact doubtful.
Beyond the economic doubts about whether that fiscal space actually exists, there is a crucial political problem. It is impossible to reverse four years of government policy in the 20 days left until the municipal, prefectural, and European Parliament elections.
The central axis of the government’s economic policy over the last four years has been over-taxation to create a super-primary surplus which it would eventually use to offer benefits and handouts.
In the process, the government has put taxpayers in an economic pincer which has created mounting debts to the tax bureau and to insurance funds.
The arrangement that the government has tabled in Parliament to allow delinquent taxpayers under strict conditions to pay off their debts to the state in 120 instalments loosens the jaws of the pincer somewhat.
Still, the overarching question is whether citizens will appreciate this gesture when they know that this was the government which tightened the jaws of the pincer in the first place, crushing them financially.
Only the ballot box can give us the definitive answer, but the spectre of a huge defeat continues to hover over the ruling party.
