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VAT in catering has been reduced by 10%

17 July 2013 / 20:07:40  GRReporter
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The Greek government has decided to reduce VAT on restaurants from 23% to 13%. "The change will take effect as of 1 August. We have made great progress and we are able to proceed with the changes," said Prime Minister Antonis Samaras in a televised address, stating that he will take personal responsibility for the first major tax reduction. At the same time, however, he warns that if state revenues fall, if restaurateurs avoid issuing receipts and tax evasion remains at the same level, then VAT will again increase to 23%.
"The reduction in VAT will prevent restaurants from closing, increase jobs and tax revenues," states the Greek Prime Minister. According to him, the progress the government has made through its policy allows it to not make new cuts in the wages and pensions of the military and to not impose a new tax on the companies to favour the insurance fund of freelancers.

The VAT on restaurants has been reduced following an agreement between the Greek government and the supervisory Troika. The bill which will be voted on later this evening provides for measures which will compensate for the loss of 100 million euro which, due to the reduction, the state funds will incur for a period of six months. The government believes that it will be able to recover the losses through the imposition of a "luxury" tax and expects that it will raise 136 million euro this year.

At the same time, representatives of the sector are adamant that the reduction in VAT will not result in a serious drop in prices.

"Despite the difficulties, important and emblematic events are currently happening in the country. The problems are certainly not resolved. Nevertheless, for the first time, we have been able to achieve two things: First, we have been able to avoid the fiscal measures stipulated in the memorandum which should have been imposed in 2014.

We will not further cut the wages and pensions of the military in this way. Similarly, we will not impose an additional tax of 2% on companies’ turnover...

But the most important change is the direct reduction of VAT on restaurants as of 1 August. For the first time we have been able not only to prevent some negative changes but also to make some positive ones.

For several months, I have personally tackled the issue of making the first major tax cuts in Greece. It was not easy. However, I told the representatives of the Troika that the reduction from 23% to 13% would result in an increase in turnover, increase in government revenue and reduction of tax evasion. They do not believe us yet and this is the truth. Nevertheless, for the first time, they have agreed to reduce the taxes. I promised this a year ago and this government has achieved it," Antonis Samaras said in his address.

He reassured the Greeks that if the particular "experiment" were successful other heavy taxes would be reduced in the future as well.

In his comment, Deputy Prime Minister and leader of PASOK Evangelos Venizelos stated that the particular solution was an important message to the market, economy and households, adding, "Our coordinated actions have yielded results."

Andreas Andreadis, head of the Association of Greek Tourism Enterprises, defined the VAT reduction as "an important measure of development and the Prime Minister’s personal success."

The opposition SYRIZA party stated that the measure was late in coming and temporary, and that it was like a "drop in the ocean of the disastrous policies of the Memorandum."

"SYRIZA is a party of cowardice and misery," New Democracy replied.

Tags: PoliticsEconomyVATCateringTax policyAntonis Samaras
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