Stournaras: Tax cuts are desirable but not possible

Plans to reduce the growth-stifling value-added tax in the food services sector along with the special consumption tax on heating oil have been frozen for now, although both issues will be discussed with Greece’s creditors next month, Finance Minister Yannis Stournaras said on Thursday.

The minister said the reduction in the heating oil tax was not possible at the moment as there are “major obstacles” in state revenues. He explained that revenues in the year’s first four months came in below the budget target, which ministry officials attribute to the delay in sending out notices for the property taxes of 2011 and 2012.

Regarding VAT on food catering, Stournaras said it is an issue that will be discussed again in June, but “while the reduction of taxes is desirable, it is not possible at this stage.”

Speaking on state television, he announced that the ministry has already confiscated properties of tax evaders totaling some 2 billion euros in value, with 400 million of that already turned into cash. More than 650 tax dodgers have been jailed, he added.

He further reiterated his belief that 2014 will be the year that Greece sees a rebound. Next year the country will also be able to tap into international financial markets again after being locked out for four years. He added that there has been significant progress in opening up so-called closed-shop professions, as some 72 percent of them – or 247 out of 343 – have already been liberalized.

Meanwhile, the Foundation for Economic and Industrial Research (IOBE) announced on Thirsday that its economic sentiment index climbed to the highest level of the last three-and-and-half years in April, confirming that the climate is starting to improve. The index rose from 88.1 points in March to 89.2 points in April, mostly on expectations created from the restarting of works on the country’s main highways and the liquidation of stocks in industry.