Farmers in Greece are facing major hardship as a result of the taxes and other charges that the Government intends to impose on them.
For example, farmers’ income tax will be increased from 13 % to 26 %; the tax on packaged farm products to 26 % and the tax on farm supplies from 13 % to 23 %.
These will be accompanied by a number of other measures that will not only make any type of farming unsustainable but will also undermine EU competition policy by distorting the internal market in agricultural products and placing Greek farmers at a disadvantage vis-à-vis their European competitors.
In particular, the Greek Government requires payment in advance of all income tax due for the coming year, and is taxing small EU subsidies of less than EUR 12 000, increasing the tax on electricity and reducing the excise duty refund on diesel used by farms. At the same time it is drastically increasing social security contributions, while granting practically nothing in the way of corresponding benefits, for the sole purpose of raising extra revenue.
In view of this:
Can the Commission say whether these measures are in accordance with European competition law or are distorting the internal agricultural market?
Answer given by Mr Moscovici on behalf of the Commission
The Commission recognises the crucial importance of the agricultural sector to the Greek economy. The 2014-2020 Rural Development Programme provides support for the establishment of young farmers, generational renewal in agriculture, in particular livestock farming, the establishment of non-agricultural businesses in selected fields of the secondary and tertiary sectors in rural areas, further development of existing small agricultural holdings, investment in agricultural holdings and ensuring sustainability and improving competitiveness. Moreover, the Greek authorities have produced an agricultural competitiveness strategy, which has defined specific actions to boost the competitiveness of the sector and, a new law on reforming agricultural cooperatives and other forms of farmers' cooperation was voted in May 2016. Supported by these reforms and financing mechanisms, the net income of the agricultural sector in Greece has been growing steadily since 2013, and in 2015 was 17% higher than two years before, indicating that the sector has adjusted despite the difficult conditions in Greece.
As regards the issues mentioned, it should be highlighted that the decision of gradually abolish the refund of excise tax on diesel oil for farmers, phase out the preferential tax treatment of farmers in the income tax code and gradually harmonise pension benefit rules of the agricultural fund with the rest of the pension system was adopted by the Greek parliament in the context of the memorandum of understanding signed in August 2015. As part of the social security reform, the extremely low social security contributions paid by farmers are indeed expected to increase but farmers will be entitled to benefits calculated in line with those enjoyed by other pensioners.