Pilot scheme for lower VAT mooted

Ministry proposes six-month test of lower rate for restaurants in talks with troika

After reportedly receiving a lukewarm response from troika officials to Greece’s request to reduce value added tax on restaurants and tavernas, Finance Ministry officials are proposing a six-month pilot program to test the impact of such a scheme on revenues, sources said yesterday.

Ministry officials broached the issue of the VAT – which the government wants to lower to 13 percent from 23 percent in a bid to boost small businesses and the tourism sector – during talks with troika mission chiefs who returned to Athens yesterday.

As Greece’s foreign creditors are not keen to cut taxes, the pilot scheme would be a way of testing whether the proposed initiative would slash revenues. If not, in principle, it could be extended.

According to sources, troika officials are open to such a scheme being applied to hotels, which are bracing for what is expected to be a record year for tourism.

Troika and government officials yesterday also discussed the progress of structural re- forms, including planned layoffs in the civil service, as well as ways of plugging an anticipated funding gap for next year of 4.6 billion euros.

According to sources, the government will meet its commitment to lay off 2,000 civil servants over the summer but officials are finding it hard to identify the 12,500 employees that must join a so-called mobility scheme by the end of the month.

Talks with the troika are expected to resume tomorrow.