Athens mulls unilaterally extending lower VAT on food services

As an impasse between Greece and the troika on a range of issues remains unbridged, the government is considering unilaterally submitting legislation that would extend a reduced 13 percent value-added tax rate on food services beyond a six-month trial period that expires at the end of this month, Kathimerini understands.

The troika, which permitted Athens to lower a 26 percent VAT rate on tavernas and similar establishments in the summer in a bid to bolster the country’s crucial tourism sector and languishing small businesses, has not responded to a Greek proposal that the lower rate continue to apply next year. Unofficially, troika officials believe that maintaining VAT at 13 percent will lead to around 300 million euros less in revenue next year, sources indicate.

The legislation for the VAT is likely to be tagged onto a draft bill outlining a new unified property tax which is to be submitted in Parliament next week, after Saturday night’s scheduled vote on next year’s budget.

As the debate in Parliament on the budget heated up on Thursday, the government appeared to be coming under increasing pressure from coalition MPs, particularly those of conservative New Democracy, who indicated that they would support the budget bill but would not back legislation that may further threaten social cohesion. The possibility of a ban on home foreclosures being lifted at the end of the year continued to fuel the most vehement opposition.

The leftist opposition SYRIZA meanwhile submitted an amendment proposing the extension of the current status quo that protects owners of primary residences from foreclosure. SYRIZA sources attribute the government’s delay in tabling its own motion to extend the current ban to backpedaling under troika pressure.

The politically contentious issue of foreclosures is said to have been broached in talks on Thursday between Prime Minister Antonis Samaras and his deputy Evangelos Venizelos though the meeting focused on stalled plans to privatize the Public Power Corporation.

Troika envoys are expected to return to Athens after a Eurogroup summit on Monday for talks on the implementation of the prior actions linked to further rescue aid, chiefly the fate of state defense firm EAS, the size of a projected fiscal gap for next year and the issue of foreclosures.

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