Greece Rakes in Tax, Tourist Dollars, But Won’t Cut Food Tax

ATHENS – There’s still a deficit in Greece, but less so because more people are paying their taxes in lump sums instead of installments, and tourism is on a course to set a record, but not enough money to reduce the 24 percent Value Added Tax (VAT) on food.

With inflation at an all-time high and households struggling to buy food and gas and deal with electric bills that have nearly doubled, the New Democracy government said that bigger-than-expected revenues will fund more aid though.

Ironically, much of those tax revenues come from the VAT, including on food, a rate among the highest in the European Union, but the government said subsidies will be directed toward reducing consumers energy costs.

With Prime Minister Kyriakos Mitsotakis’ New Democracy government facing a re-election campaign in 2023, he still has a lead of 8 percent over the major rival and former ruling SYRIZA that has been sniping at his handling of the economy – which is expected to grow almost 4 percent during the lingering COVID-19 pandemic.

Tax collection figures presented by Alternate Finance Minister Thodoros Skylakakis showed a bump up of 799 million euros ($813.99 million) in June compared to the target set by the government, said Kathimerini.

“The positive course of public revenues continued in June. Even if the advance collection of some revenue from the Single Property tax (ENFIA) is taken into account, the growth rate of tax revenue compared to the budgeted remains very high, confirming the significant growth dynamics of the economy, despite the extremely adverse international conditions,” he said.

Tax revenues were 4.117 billion euros ($4.19 billion) which was up 24.1 percent against the goal, the report said, because of a higher collection rate and from the second installment of the hated ENFIA.

Finance Ministry sources not named told the paper that means there’s enough money in the state coffers to finance further assistance over energy costs, including gasoline, although the government earlier backed away from a pledge to look at cutting the food VAT.

Buddget data for January-June showed a primary deficit of 3.43 billion euros ($3.4 billion) against a target for a primary deficit of 4.9 billion euros ($4.99 billion) with tax revenues of 24.73 billion euros ($25.17 billion.)

That was up 3.64 billion euros ($3.7 billion) or 17.3 percent compared to the budget target although still not enough to bring a surplus, but enough to fuel further state aid for energy costs, but not food.


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