Greece’s banks reopen, but taxes compound confusion
Hastily reworked VAT likely to increase pain for retailers, buyers.
ATHENS, GREECE — Greek banks opened their doors Monday for the first time in three weeks. But with strict limits still in place on the flow of money, the battered economy was far from returning to normal.
As Athens scrambles to meet creditors’ demands in exchange for continuing to negotiate a proposed bailout package worth up to 86 billion euros ($93 billion), Monday was shaping up as the beginning of what could be a long economic slog. Even though Chancellor Angela Merkel of Germany called over the weekend for a swift resumption of the bailout negotiations, the talks could take months.
The Athens stock exchange, which stopped trading on June 29, remained closed Monday, with no word of when it might reopen.
And a rejiggered system of value-added taxes — hastily put in place Monday as part of Greece’s efforts to meet creditors’ demands — seemed to be sowing confusion in its early stages. Some merchants said that, for now, they would simply absorb the higher taxes.
“I can’t raise the prices. The people won’t tolerate it,” said Loukas Papanastasiou, owner of Loukas’ Cafe. “I will have to find a way to reduce my profit margin.”
A higher value-added tax, of up to 23 percent, has been levied on restaurants, travel tickets, and food items like meat, sugar and vinegar. Basic foods like milk, as well as energy and water, will continue to be taxed at 13 percent.
The changes in the VAT have been so swift that not even the checkout clerk in an Athens supermarket could explain Monday which items were being taxed at a higher rate and which ones were not. “We’ll just have to figure it out as time goes by,” the clerk said.
The tax increases seemed likely, at least initially, to add to Greece’s financial hardship. And as long as tight controls remain in place on the movement of money outside the country, businesses that rely on foreign suppliers will continue to struggle.
The higher taxes are part of the new sources of revenue that were demanded last week by Greece’s creditors in exchange for the opportunity to negotiate a new bailout, and to unlock emergency financing to help Greece pay its bills.
Athens on Monday repaid the International Monetary Fund about 2 billion euros in loan arrears and also made a critical 4.2 billion euro bond payment to the European Central Bank, both organizations confirmed. By making the IMF payments, Greece will again become eligible for financial assistance from the fund. WASHINGTON — The push to impose criminal penalties on auto executives who fail to disclose deadly automobile defects hit another roadblock last week when a Senate committee voted down such a proposal.
Lawmakers and safety advocates who were pushing to institute criminal penalties for such behavior expressed dismay as that and a series of other auto safety reforms — including barring used-car dealers from selling vehicles with unrepaired recalls — also failed to proceed.
“Hiding these deadly defects with near-impunity is what the industry has succeeded in doing,” said Sen. Richard Blumenthal, D-Conn., who introduced several provisions that were voted down.
A few measures, such as raising the maximum civil penalty on automakers from $35 million to $70 million, won approval, however. Republicans also agreed to give the Obama administration the funding increases it had requested for certain National Highway Traffic Safety Administration programs, provided the agency first adopts all of the inspector general’s recent recommendations.
A record year for auto recalls has led to multiple