Retailers’ ‘no’ to VAT hike

Any increase in value-added tax (VAT), which is considered likely in the new year, will be passed on to the consumer as it will have negative impact on firms’ profitability, a retail business leader said yesterday. «Despite government assurances to the contrary, a VAT hike would catch firms by surprise as they have already formulated their pricing policy for the winter period,» said Theodoros Vardas, president of the Association of Greek Retail Businesses (SELPE). Any change during this period will create confusion among consumers and strain firms’ internal functions, he added. Vardas said that if the VAT hike became inevitable, «it should be announced along with the tabling of the 2008 draft budget, and come into effect after April 1, 2008.» He proposed the immediate introduction of price tags bearing separate recordings of VAT in order to prevent speculative price increases when the hike is introduced. The Athens Chamber of Small Manufacturers said it was categorically opposed to a VAT increase, «both for reasons of social justice and because of the upheaval it would create in the market.» «Businesses, particularly the small and midsized ones, already operate in an unfavorable economic environment and any VAT increase would add heavily to the negative effects on demand, inflation and the burden on the economically weak,» it said in a statement. Tax evader lists Separately, Economy Minister Giorgos Alogoskoufis said yesterday the government’s next moves against tax evasion will be based on lists of people that have been drawn up according to their likelihood to break the law. «We are drawing up indices for categorizing taxpayers according to their likelihood to evade taxes, and will conduct checks of varying frequency and intensity in each category,» he told Parliament’s standing Economic Affairs Committee. Alogoskoufis added that the measure was «a decisive step,» to be complemented with administrative measures for more efficient inspections. Dimitris Daskalopoulos, president of the Federation of Greek Industries (SEV), who appeared before the committee, said the draft bill was «positive» but the fight against tax evasion required long-term planning. «It is lacking in many respects; it is not a thorough initiative,» he said. Tax officials’ representatives said their union members needed to be protected against false allegations of corruption, as the bill encourages citizens to report such cases.