Brussels, 05/06/2013 (Agence Europe) - The Commission largely agrees with the views expressed by the International Monetary Fund (IMF) last week on suggestions of cutting taxes in Greece, said a Commission source on Wednesday.
Last weekend, the IMF director general, Christine Lagarde, said: “Pressures to reduce taxes using the space from any fiscal over-performance should be resisted”. The Greek finance minister, Yannis Stournaras, had earlier told this newsletter about an agreement with the troika (European Commission, European Central Bank and IMF): “Indeed, another agreement with the troika says that if we overpass the target in the primary surplus, 70% of the excess can be used for social policy. There are many candidates for tax reduction, for social policy etc. Everybody cannot be satisfied but if we overpass the target then we can satisfy certain of these demands” (see EUROPE 10847).
Asked about whether there was a contradiction here, an IMF source merely commented that she thought Lagarde's statements were “clear”. The Commission source said that, in principle, there was agreement, but there would have to be discussions when the country's budget figures were known, in other words before the summer of 2014, saying it was important not to take risks and to ensure that the budget targets for the following years would be met. The most recent Commission report noted that the budget prospects beyond 2014 were uncertain. The Commission expects a budget gap of 1.7% of GDP in 2015 and 2.1% in 2016, before coming on track. The Commission says that caution is therefore required.
Right now, what the Greek government wants (as a source at the Greek finance ministry pointed out) is a reduction of VAT on cafes and restaurants. Stournaras discussed this with EU Taxation Commissioner Algirdas Semeta during the latter's visit to Greece recently. Asked at a press conference about Lagarde's comments, Semeta said: “OK, there are points of view”, but hoped the troika would agree to the VAT reduction. The above Commission source says the question will be discussed during the current troika fact-finding mission. (EL/transl.fl)