ATHENS – Greek Finance Minister Yiannis Stournaras said the country’s coalition government will try to persuade international lenders to allow a reduction in some taxes, particularly the 23 percent Value Added Tax (VAT) that is killing restaurants and taverns as tourist season looms.
He also defended a drop in expected tax revenues that came despite big tax hikes that came along with big pay cuts and slashed pensions as part of austerity measures being imposed by the government on the orders of international lenders.
In an interview with the newspaper Kathimerini, Stournaras acknowledged that Greeks can’t stand any more austerity measures, buried under pay cuts, tax hikes and slashed pensions that have made many unable to afford not only their tax bills, but food and other necessities.
“We understand that a lot of families have reached their limits,” he said Stournaras in an interview with the paper. “This is why we negotiated hard for the emergency property tax to be reduced by 15 percent despite the Troika’s objections.”
He was referring to the hated so-called “Haratsi” a doubling of the property tax by former finance minister Evangelos Venizelos, now head of the PASOK Socialists who are one of the partners in the coalition government headed by the New Democracy Conservative leader Samaras.
Envoys from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) are due back in June for another assessment of reforms before signing off on another installment as part of a second bailout of $173 billion.
The coalition government led by Prime Minister Antonis Samaras wants changes in the civil service that doesn’t tie promotions only to seniority as many younger people in Greece are held back by a system that doesn’t reward competence or merit.
Stournaras said the Troika inspectors will be asked to show some leniency. “During their next visit, we will examine reducing other levies, such as Value Added Tax (VAT) for food service. Also, we will take another look at the special consumption tax for fuel,” Stournaras said.
He played down concerns that falling revenues in other areas are a sign that Greece will have difficulty meeting its targets. “There is a myth that revenues are collapsing,” he said. “The data that I have seen show that while we are off target in some areas, such as consumption taxes, we are making up for it by beating targets elsewhere.”
Stournaras said net revenues for the first quarter of 2013 were just above the Troika’s target. “The mistake that many people make is to compare this year’s revenues with last year’s,” he said. “We knew that revenues would be lower this year because of the continuing recession and that is reflected in the targets we have agreed with the Troika. The only comparison that should be made is against the targets,” although the net result is still less money.
He also said that 15,000 civil service sackings agreed with Greece’s lenders were part of a wider plan to improve the efficiency of the public sector. He said that younger personnel would play a part in achieving this goal.
“The improvement of the civil service does not consist of continual dismissals,” he said. “But it is an ongoing process, which can happen through regular training of our personnel and the promotion of younger and abler personnel to high-ranking positions. We have agreed to reduce the amount of time served that is needed before a promotion can take place.”
Labor unions are fiercely resisting the idea in the public sector while the country’s largest union, representing private workers, has called for a May 1 general strike to protest policies that have pushed unemployment to a record 27.2 percent.