ECONOMY

BoG asks for revision of exemptions

Bank of Greece Governor Yannis Stournaras is in favor of revising tax exemptions and reduced value-added tax rates which currently apply in various sectors and geographical areas, according to the central bank’s intermediary report issued on Tuesday, which also expects growth to amount to 0.7 percent this year and 2.5 percent in 2015.

Stournaras adds in his report that special care should be taken to make social security funds sustainable, particularly in the revision of various “exceptions,” mainly refering to the early retirement thresholds.

The BoG head expects a higher growth rate this year than the government’s 0.6 percent forecast, but stressed in his report that a basic condition for the country’s return to economic growth is the creation of an environment of “communication and cooperation among political entities so as to ensure continuity.”

Stournaras stated that “the immediate lifting of the uncertainty within the country and commitment to promoting reforms are necessary conditions for the strengthening of economic growth and employment, and for the country’s definitive exit from the crisis.” He also noted that Greece “still requires support from a reliable program of precautionary funding from the European partners.”

The central banker remarked that the government ought to focus on combating unemployment so as to expand the tax base and strengthen the sense of social justice. The main pillars of that effort should be strengthening the tax administration, intensifying tax inspections through cross-checking, and implementing modern monitoring techniques through risk assessment systems and property registers.

The proliferation of exceptions from general direct and indirect taxation regulations, “that are not justified by social or growth criteria,” should be reviewed, the report asserts, echoing the demand of the country’s creditors for the abolition of the special tax status of various groups and geographical areas. The budget shows that the loss of revenues from the low tax rates on drugs, hotels, newspapers and magazines amounts to 582.2 million euros per year, while the 30 percent VAT discount on the islands deprives the state of 347 million euros.