Kadri Klaos, head of the public finances department of the Ministry of Finance, told ERR that tax hikes will have a considerable effect on the budget next year.

"There will be around €300 million in additional revenue," Klaos said. "The lion's share will come from hiking the VAT rate from the current 20 percent to 22 percent at €235 million," she said.

In all, tax revenue is projected to grow by more than €600 million compared to the spring economic forecast. Klaos said that based on the Finance Ministry's summer forecast, robust employment and growth of average salary will yield additional revenue.

The forecast does not include revenue from taxes that are still in the planning phase.

"The state budget is in the red, and even with this additional revenue, we still forecast a deficit of €1.2 billion, meaning that spending still far outstrips revenue and finding enough austerity to balance it in a single fiscal cycle is very difficult, so as not to say unrealistic," the ministry representative remarked.

"But what we can say right now is that the coalition agreement details several other sources of additional income. They include the hot topic of the car tax, various environmental charges, road usage fee. However, these have not been factored in at this time as the bills are not completed yet and those additional sources of revenue remain in the negotiations phase," Klaos said.

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