Galery

1

The Ministry of Finance considers three different options to fill the gap in state revenues this winter. According to the options the Financial Minister George Papakonstantinou presented the socialist government should choose between increase in the average VAT of 11% by one or two points or introduction of a 15% - 18% VAT for all products and services in the country. Currently, there are three groups of VAT in the country. The main indicator for the largest group of products and services is 23%, the average is 11% (mostly for essential goods and cultural events) and the lowest is 5.5% on printed editions, etc. The third option for increasing state revenues is to resort to a new increase in excise duty on fuel considering equalization of the implicit tax on fuel for transport with the heating tax in the country.

The government has not yet decided which of these options will be chosen but the next changes in tax legislation will be unavoidable, experts commented. “Our main concern is to secure the revenue that will help us reach our goals (set in the 2010 budget) with the least possible problems for the Greek economy,” said the Minister of Finance George Papakonstantinou after the meeting of Euro area Ministers ECOFIN in Brussels. Regarding the proposal to increase excise duty on fuel, the Financial Minister said that an option to relieve the poorest strata of society through government subsidies will be considered.

The National Confederation of Hellenic Commerce responded quickly to this proposal. Its President Vassilis Korkidis said in an open letter to the media that if the increase in tax burden is unavoidable it would be better to raise fuel excise duty. He backed that proposal, arguing that further increase in VAT could lead to disastrous results for the local economy. He said this is a good way to reduce the deficit, imposing at the same time strict control on fuel trade in Greece. The National Confederation of Hellenic Commerce estimated that the Treasury loses about € 1.5 billion annually because of illegal fuel trade in the country.

Meanwhile, the National Statistical Service of Greece announced the survey results of the market. The main concern turns out to be the raising level of inflation in August, which reached 5.5 % compared to the 5.4 % in July this year. The average inflation in the Eurozone countries for this period is about 1.7 %. Economic analysts commented that the increase of 0.1% during the summer sales is a surprise as the level of inflation is expected to fall due to lower prices and increased demand. The plans for further tax increases will make its value only grow not excluding and speculative increase in prices of goods and services in excess of the added tax burden.