ECONOMY

PM rules out VAT hike for now

Prime Minister George Papandreou yesterday ruled out additional increases in value-added tax, saying the government will find alternative ways to boost revenues. «There has been of course the possibility of [tax on] some products being raised but we’re seeing if we can find other ways of getting revenues rather than raising that further,» Papandreou told Reuters yesterday, during a weeklong trip to the US. Right now, the prime minister added, the government says, «’No’ to raising VAT.» Instead, in order to broaden its tax base, the government wants to fight tax evasion. It is also considering cutting taxes in some areas to stimulate investment and support economic growth, Papandreou said. Greece has introduced a tough austerity program to fight its debt crisis, raising taxes and cutting public servants’ wages and pensions in exchange for a bailout package from the European Union and International Monetary Fund. Local press reported yesterday that Greek Finance Minister Giorgos Papaconstantinou held talks with his German peer on extending the repayment period on the three-year loan. The German Finance Ministry denied that any such discussion took place. In a bid to consolidate Greece’s banks, the government has appointed Lazard, HSBC and Deutsche Bank to advise it on the best way to consolidate the sector, which became dependent on liquidity lines from the European Central Bank after the debt crisis shut them out of international credit markets. Papandreou said that, after expected mergers, Greece should have «one strong public sector bank and two or three big private banks.» Expectations of consolidation in the banking sector have been driving banking shares higher in Greece. In July, Piraeus Bank offered to buy 77.3 percent in ATEbank and 33 percent in Hellenic Postbank from the government for 701 million euros in cash. «These statements may trigger a new wave of merger and acquisition scenarios, the circulation of which proved to be supportive for the banking stocks in the recent past,» Proton Research said in a note to investors. The Bank of Greece has also lent its support to lenders teaming up as a means of getting through the crisis.