Filenews 11 October 2024 - by Eleftheria Paizanou
The Government said one thing on 25 September, through the Minister of Finance, when it was ending the remaining measures against high prices, namely zero VAT (end of September) and subsidy for the increase in electricity (end of October) and others announced yesterday, when it abruptly reintroduced zero VAT in 6 out of 11 product categories.
A move that surprised even the co-governing parties, which were preparing their own proposals, to submit them next Tuesday at the customary meeting with Deputy Minister to the President Irene Piki.
The Government with its move yesterday denied and emptied itself. In September, when the Ministry of Finance announced the end of zero VAT and the subsidy of the increase in electricity, it cited several reasons, claiming that based on the current situation, namely the reduction in the rate of increase in inflation, the reduction in the price of fuel and electricity, "the reasons for the decision to implement these measures no longer exist".
What did he say yesterday?
Two weeks later, the Government made a 180-degree turn, deciding to restore zero VAT in 6 categories, namely baby diapers, adult diapers, baby milk, feminine hygiene items, vegetables and fruits, on the grounds that these products are aimed at young couples and the middle class. As stated by the Minister of Finance Makis Keravnos, "following the price developments, we feel that at this moment it is time for this category of products to re-enter the zero VAT rate".
The important thing about yesterday's decision is that zero VAT on these products will apply without a specific expiry date.
It is worth noting that the decision to abolish zero VAT on baby diapers, adult diapers and baby milk was strongly opposed, as VAT in these categories returned to 19%, burdening the budget of many households.
Also, fruit was added to zero VAT for the first time.
Regarding the electricity subsidy, the government's decision to abolish it has not yet changed, without excluding this possibility either, with the competent minister stating that they are monitoring developments, adding that at the moment oil prices are at a very low level.
Grumbling to co-rulers
In the co-governing parties DIKO, EDEK and DIPA there is grumbling and annoyance, as they were not informed, once again, about the government decisions, resulting in an image of misunderstanding. Perhaps that is why no official statements were made yesterday on their part.
On the other hand, there are also statements that the pressure that the Government received from the co-governing parties but also from the outcry of the citizens forced it to change its position. This was rejected by Makis Keravnos himself, who stated that when the government announced "the previous measures in force, they accused us of giving a seriously ill person aspirins".
He stressed that the government does not follow "any populism or criticism that is not essential", but "we follow and implement policies on the basis of the needs of society and the economy".
Scheduled meeting
However, a government source told "F" that yesterday's meeting between the President of the Republic and the Minister of Finance was scheduled for days to discuss the issue of consumer support measures.
In relation to next Tuesday's meeting with the parties of the coalition government, we were told that it will take place normally, since, as a competent source said, the Government is open to reasonable proposals that will not disturb fiscal stability.
Measures also in the context of the reform
At the same time, the Government informed that it will gradually announce relief measures that will fall under the tax reform, which is estimated to be fully implemented in 2026, although studies are still ongoing for the time being.
Among the measures it is estimated that will be compensatory measures from the implementation of green taxation, the increase in the tax-free amount, etc.
In addition, the government side proposes the granting of grants, subsidies, the enhancement of the disposable income of various categories of citizens, as well as social benefits, which next year will reach €2 billion.
