With envoys from international lenders in Athens to check the country’s books and the pace of reforms, the Greek government is going to ask again for permission to lower the 23 percent Value Added Tax (VAT) in restaurants.
The Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) has rebuffed the idea before and insisted on more austerity reforms although the IMF admitted it wasn’t working.
A range of issues were on the table as the latest quarterly review of the Greek fiscal adjustment program began. Finance Ministry sources told the newspaper Kathimerini that the Greek side raised the possibility of reducing VAT to 13 percent in the food service sector on a pilot basis.
Greece argues that lower prices would encourage more customers, especially during the tourism season, and revenues would be higher. Athens appears to have proposed that a six-month reduction be introduced to test the waters.
Despite big tax hikes, revenues were off $600 million in the first quarter of the year because Greeks buried under pay cuts, tax hikes and slashed pensions have slowed spending sharply.
Troika officials – Paul Thomsen of the IMF, Mathias Mors of the European Commission and Klaus Regling of the European Central Bank – were due to meet Administrative Reform Minister Antonis Manitakis as a number of structural reforms, such as the firing of civil servants and the reorganization of ministries, fall under his authority.
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