The changes to the country?s tax system, as recommended by the International Monetary Fund, will be postponed until after the general elections, set to take place this spring.
The new National Tax System will have to wait as the government does not want to start a fresh battle with society, given that Finance Minister Evangelos Venizelos intends to heed the tough line set by the IMF.
On the other hand New Democracy, the second partner in the coalition government, is proposing reductions in value-added tax and corporate tax rates in an effort to help the country to emerge from the ongoing recession. Consequently the differences between ND and PASOK are holding up any changes to taxation until after the election, sources suggest.
IMF officials are proposing an increase in indirect taxes in order to offset social security funds? losses resulting from the reduction of contributions. Their proposals, which are coming at a time when the market has already been squeezed to the limit due to cuts in salaries, include hikes in VAT rates and special consumption taxes.