By Tasos Dasopoulos
In anticipation of the large increases that are gradually appearing in all the products and services of the so-called “housewife basket”, the Ministry of Finance is trying to build new “mounds”, so that the wave of accuracy is less painful for households.
The first move came with a 400m-euro subsidy package for electricity and gas for January, which this time included all businesses. It is no coincidence that the Prime Minister reminded companies, when announcing this measure, that one of the main reasons for the subsidies is that companies do not spend much of the increase in production costs on final prices to the consumer. .
It seems that the intervention was not accidental and found a response from the companies. Representatives from different sectors acknowledge that the subsidies will cover (depending on the type of business) from 35% to 50% of energy product increases for January.
However, this does not reassure the leadership of the Ministry of Finance, which expects large increases in the post-due period due to the increase in fuel prices, raw materials and high transport costs, which will begin to be recorded at a faster pace from January onwards.
In an effort to halt, yesterday the Minister of Development and Investment Mr. Adonis Georgiadis left open the possibility of tax interventions in order to absorb part of the expected revaluations, in basic items and services of daily use. His statement was interpreted as an imminent intervention in the direction of the temporary reduction of VAT rates. Competent sources of the Ministry of Finance, to whom the question was asked, answered succinctly that “no decision has been taken”. They made it clear, however, that no intervention is being considered in the direction of reducing the VAT on fuel, as this would be of little use and would lead to an increase in smuggling at current price levels.
And the interventions in VAT, however, are extremely complex, since it will be difficult to form the “basket” of products and services where VAT will be reduced. In addition, due to the impact they will have on public revenues, in a critical fiscal year like 2022, they will have to first get the approval of the institutions. The final meetings with the institutions in the context of the 13th evaluation are scheduled to take place on the 25th of the month. Therefore, decisions on this issue should not be expected before the end of the month.
The financial margins are narrow
In any case, sources in the Ministry of Finance reiterate that the margins are narrow, as together with the new measures for accuracy we will have by the end of the month two more packages of measures, at budgetary cost.
One will be direct aid to catering, entertainment and culture businesses, which are currently affected by the pandemic, the cost of which will be covered by the Covid budget reserve. At the same time, of course, the subsidies for electricity and gas will continue for February (but also later if necessary).
Source From: Capital
I am Derek Black, an author of World Stock Market. I have a degree in creative writing and journalism from the University of Central Florida. I have a passion for writing and informing the public. I strive to be accurate and fair in my reporting, and to provide a voice for those who may not otherwise be heard.