Monday, 7 April 2014

Samaras promises tax relief and liquidity to businesses

Prime minister Antonis Samaras announced today that the state will provide small businesses and traders with a much-needed reduction in their overall tax debt, by offsetting taxpayers' VAT debts against the state's.

Businesses and the self-employed are obliged to pre-pay 23 percent Value Added Tax on their turnover each month, or face hefty fines of at least 500 euros. In theory, the state reimburses much of that VAT at the end of the year, once businesses and traders have presented expenses in their tax statements. In practice, however, the state has failed to disburse the cash, holding it as credit against future tax obligations and sucking up liquidity.

"The measure will be sent to parliament soon and implemented in September," said Samaras, adding that it will initially apply to small businesses and traders with turnover of up to half a million euros, before being extended to larger businesses with turnover of up to two million euros.

"With the new system, tax-compliant entrepreneurs will have no run-ins with authorities as a result of the state not paying them," said Samaras. "That will immediately allow the market to operate more smoothly."

The National Confederation of Greek Trade hailed the announcement as "satisfying a standing and vitally important request on the part of Greek trade, whose implementation is expected to provide indirect liquidity to small and medium-sized enterprises."

Liquidity crunch

Withholding VAT refunds is not the only way in which the state has squeezed businesses and traders during the crisis. The state owed private contractors about 9.5bn euros at the end of last year, Samaras revealed. "That sum is now down to 4.7bn euros and will fall to  two billion euros by the end of the year," he said, hailing a new era of "justice and growth". He said that that reduction was thanks, in part, to Greece's unexpectedly high primary surplus for 2013, which the Greek government has said will be about 2.9bn euros.

The European statistical authority, Eurostat, is expected to corroborate Greek 2013 budget figures including the surplus on April 23.

Both announcements are expected to provide much-needed relief for Greece's entrepreneurs, but not all their liquidity problems are resolved. At the beginning of the crisis, in 2010, the state obliged businesses to pre-pay 80 percent of income tax on the following year's expected turnover. That measure remains in force.

Samaras was elected in June 2012 on a platform of returning Greece to growth and jobs, and he has since reminded voters of his pro-business stance. Last September, during the annual Thessaloniki International Fair, he said that one of the first goals of tax policy would be to lower corporate tax rates from 25 percent to 15 percent.


The government is fighting to recover its image after a mixed week. On April 1, an informal meeting of finance ministers approved Greece's delayed facilitation loan instalments amounting to 8.3 bn euros, and praised the country's progress in balancing its budget. But on April 3, Samaras lost his cabinet secretary after the latter was filmed saying that the government is persecuting far-right Golden Dawn for political gain.

A poll for the Sunday edition of To Vima showed the ruling conservatives losing their two-point lead over the radical left opposition party, Syriza. Their approval fell from 21.7 percent of the vote to 20.8 percent between the beginning and the end of the week. Syriza rose from 19.6 percent to 21.5 percent.

No comments:

Post a Comment

Note: only a member of this blog may post a comment.