ECONOMY

Car sector could boost state coffers

The government is looking for ways to help the car sales industry to move up a gear in bid to boost sagging state revenues. In a decision that could be announced by the end of October, the government is looking at introducing incentives for car owners to pull old vehicles off the road by offering tax breaks on new cars purchased. The other option being considered is reducing the new car sales tax and a luxury car levy for all buyers, regardless of whether they turn in old vehicles, in a bid to boost turnover in the sector. Any policy changes in this area could be implemented in November, according to sources. With taxes from the car industry coming to a screeching halt recently, the government has started to heed the advice of the Association of Greek Car Importers (SEAA). The group has said that higher levies on vehicles in conjunction with the pinch of recession have reduced state revenues from the sector, rather than boosting them. In 2008, state revenue from each vehicle sold averaged out at 5,751 euros, while the figure now stands at 4,462 euros, which translates into a drop of 22 percent. Data from SEAA for the first eight months of the year showed that revenues from new car tax, VAT and the luxury car levy imposed on new and used imported vehicles reached 521.3 million euros, an average of 65.1 million euros per month. In 2009, the average monthly figure stood at 82 million euros. The figure for the full year is not expected to exceed the 650-million-euro mark, according to estimates from SEAA, falling well short of the 1-billion-euro target set out in the state budget. Greece’s plans to slash its deficit, in line with goals set by the European Union and International Monetary Fund, are on course due to massive spending cuts as revenues trail well behind targets. The Finance Ministry is looking for ways to get money into state coffers while also providing a boost to the economy, which is going through its worst recession in almost 40 years. The car industry was also a major job provider in Greece before the economy began shrinking in 2009. However, growth in the sector has taken its toll on Greek roads, which are fast becoming overcrowded. The number of cars on the country’s streets has grown each year by some 4 to 5 percent, or between 200,000 and 250,000 vehicles, versus a growth rate of just 2 percent in the European Union as a whole.