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Economy

Prices Skyrocket, Greece Looks to Cut 24% Food Value-Added Tax

ATHENS – Consumers in Greece overwhelmed by soaring costs for energy could get a break over food prices with the New Democracy government considering cutting a 24 percent Valued Added Tax for the goods.

The VAT is applied on supermarket purchases and puts the cost of even some basic necessities out of the range of household being besieged by rising prices and other assessments, with electricity bills going through the roof.

A cut in the tax – it wasn’t said how much – is being mulled as the government is putting together a 2022 supplementary budget of some 2 billion euros ($2.22 billion,) while also providing some energy subsidies.

Finance Minister Christos Staikouras told Parapolitika radio that any measures being considered would depend on available space in the budget to absorb the revenue losses during the COVID-19 pandemic.

They would be strictly aimed at products that affect the cost of living for lower-income groups and the vulnerable, finance ministry officials had said, while Staikouras said they would have to be balanced against affordability.

The reduction of VAT was also delicately mentioned by Prime Minister Kyriakos Mitsotakis who said that it as a “measure in the quiver” of the government without indicating whether it would happen.

There was also said to be concern whether a cut in the tax would be reflected in lower prices for foodstuffs or whether supermarkets would just keep it, along with uncertainty how it would deeply it would affect the state budget.

With the world fallout on markets in foods from Russia’s invasion of Ukraine likely to cost Greece as much as 1 percent of its Gross Domestic Product (GDP) of 180.32 billion euros ($200.3) billion, Staikouras said a budget deficit wouldn’t go past that although the paper said the ceiling was 2 percent.

 

 

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