Desperate measures?

Whatever objections may have been provoked by the government’s announcement on Tuesday of imminent tax and VAT hikes, one really cannot dispute the reasoning behind the measures: our national income has been dramatically reduced, our deficit and debt have spiraled out of control and the state is in urgent need of money. The easiest way for a nation to raise money is to increase its taxes – generally indirect taxes – which might not be the fairest form of taxation (as citizens pay the same amount regardless of their income) but it ensures that state coffers get the necessary boost. The government has also pledged to curb its expenditure, but it remains to be seen whether this will be implemented as spending was relatively restrained last year, which does not leave a lot of scope for further savings. The government has made such pledges in the past but has sometimes failed to fulfill them; not for reasons of expediency but simply because they were not absolutely necessary. The Economy Ministry hopes to make 1 billion euros from the VAT hikes and around 400 million euros from the increase in indirect taxes on cigarettes and alcoholic beverages; the latter, however, will depend to a great extent on how the increases affect demand… This will be revealed in a review at the end of the year…

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