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Economy

Finance Chief Says Greece Won’t Cut High Value Added Tax on Food

ATHENS – Despite an accelerating economy and likely second straight year in tourism bringing in billions of euros, Greek Finance Minister Kostis Hatzidakis said the New Democracy government can’t afford to cut the tax rate on food.

“We cannot and do not want to reduce Value Added Tax (VAT) he said, refusing a request from Association of Greek Food Industries (SEVT) President  Ioannis Jotis, at the body’s annual general assembly.

“We cannot reduce VAT for reasons of fiscal balance and we do not want to for reasons of balance. We don’t want to encourage consumption, but investment. I also believe that the VAT reduction will not reach the market, the consumer. I don’t want to sign off on a destabilization of the budget,” he said.

The standard VAT rate in Greece is 24 percent, and certain goods and services are eligible for reduced rates of 13 and 6 percent and there are 17 percent rates applicable to specific islands such as Chios, Kos, Leros, Lesbos, and Samos.

Jotis said: “We supported the measures. We did what was asked of us. We want to have a reduction in VAT. Let us also compete with the other countries. If Spain hadn’t done it, then the increases in that country would be much higher at the given moment. I guarantee that the VAT reduction will be passed on to the consumer.”

Hatzidakis didn’t say why the government couldn’t cut the tax further for food after doling out billions of euros in subsidies for electricity bills that paid up to 90 percent of the cost that consumers otherwise would have had to bear.

Hatzidakis said he’ll review the rates at the end of 2024 to see if they can be reduced, the government earlier getting supermarkets to set up so-called Household Baskets that held down the costs on 51 staple items.

“You ask us to make investments and get subsidies from the  investment incentives law. We make investments but we don’t get the subsidies. Payments are delayed for more than six months, even a year. The businessmen go and on the one hand they are told that now they have to give money to Thessaly for the floods, on the other they are told something else,” said Jotis.

“We are an industry with a turnover of 17 billion euros ($18.41 billion,) 7 billion euros ($7.58 billion) in exports and we are the largest employer with over 360,000 direct and indirect jobs,” added Jotis.

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