VAT hike back on the table

The government is now said to be in favor of an increase in the value-added tax on items in the 11 percent bracket to 13 percent in order to raise budget revenues next year. It also looks like it is about to postpone the leveling of the tax on heating oil with that of diesel until October 2011. A Finance Ministry official suggested that each percentage point of increase in VAT will bring the public coffers 500 million euros in revenues. Consequently a VAT hike from 11 to 13 percent should bring in about 1 billion euros. The same official argues that these revenues are more certain, as they concern receipts from profit-making companies such as supermarkets. The new increased VAT will affect the prices of commodities such as foodstuffs and is likely to apply as of January 1, 2011. The hike in heating oil tax will therefore be put off until next winter, with subsidies offered to the financially weaker sectors of society. As far as the measure for the settlement of outstanding taxes is concerned, enterprises and freelancers will have to pay a minimum of 100 to 400 euros, depending on their accounting category. The Finance Ministry is reportedly studying various ways to attract as many enterprises and freelancers as possible. To make the deal more attractive, the ministry may well allow taxpayers to destroy their tax documents for the 2000-09 period. This should bring in some 2 billion euros, the government expects.

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