The Greek Government decided last week to impose swingeing taxes, affecting every social group and asphyxiating the Greek economy which is already badly affected. These measures include an increase in the standard rate of VAT from 23% to 24% for basic necessities, taxes on Internet connections and pay-TV, the abolition of the 30% reduction in VAT for the islands and an increase in the excise duty on diesel for heating. Professionals and businesses are required to pay at least 82% of their income to the State and various funds, which discourages any new business venture. While fiscal policy lies outside the Community's competence, such measures obviously affect the very core of the Community acquis, namely the encouragement of entrepreneurship, the free movement of capital and the right to expect fair remuneration for work.
In view of the above, will the Commission say:
1. Was the above package of measures proposed by the Greek Government or by the Troika?
2. What is its position regarding the impact of these measures on the survival of businesses and on the investment climate?
3. How can it help the Greek Government make the Greek market more favourable for investments, for the creation of new businesses and for the survival of existing businesses?
Answer given by Mr Moscovici on behalf of the Commission
This package of tax measures was proposed by the Greek Government in the context of the fiscal targets agreed with the European Stability Mechanism, the Commission and the European Central Bank when the third economic adjustment programme was approved in August 2015.
The Commission is aware of the concerns of enterprises and professionals in Greece about the tax and social contribution burden and the difficulties many of them face in meeting their obligations, particularly given the tight liquidity conditions currently in the economy.
It is for this reason that the Commission is providing extensive on-the-ground technical assistance to the General-Secretariat for Public Revenues to implement tax administration reforms that would allow the Greek State to meet its revenue targets while gradually reducing the tax and social contribution rates for enterprises, professionals and employees.
At the same time, a wide range of reforms in labour markets and product markets (including energy) was agreed between the Greek Government and the Commission in the context of the Supplemental Memorandum of Understanding signed on 16 June 2016. These reforms improve the business environment and are thereby conducive to growth and to improving the competitiveness and the profitability of Greek enterprises. The Commission is helping the Greek authorities to design and implement these reforms in line with European best practices through a series of technical assistance projects. Moreover, policies supporting investment will be framed within a comprehensive Growth Strategy to be developed by the Greek authorities with Commission input and are supported by EU structural funds.