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Greece against tobacco excise duty increase

12 November 2009 / 11:11:43  GRReporter
3570 reads

Victoria Mindova

Greece was not too happy about the decision of the EU financial ministers to increase the excise duty of tobacco products with 40%, because the profitable tobacco industry in the country will take a big hit. The decision will come into effect from January 1, 2010 and the value of the excise will increase from €64 for 1000 pieces of tobacco to €90 for the same quantity. This way the indirect tax will increase from 57% to at least 60% from the production prime cost of a pack of 20 cigarettes.

Euro-commissioners gave a transition period for the new regulation until 2018 to eight Eastern European countries, among which are Greece and Bulgaria. Right now Greece needs the time to adapt, not only when it comes to the excise duties but in general to regroup its state management system. The Euro-commissioners expressed their big disappointment by the lack of initiative of the previous government, which did not put into action any of Brussels’ recommendations after the last Ecofin meeting in June this year.

A EC report for long-term stability includes that for 2009, together with Spain, Slovenia, UK, and Ireland, Greece is among the countries with two times higher state deficit than the planned one for the period and immediate measures for its decrease should be put into action. Otherwise, the Euro-commissioners are planning a medium term plan for the budget deficit, inflation and economic crises to become more severe.

Together with the planned reforms in the tax legislature, state administration and the statistics institute, the Commission recommends to the Greek government to introduce changes also in the structure of the retirement funds. This is needed due to the increasing aging of the population and as a result state expenses in social security increase. This also includes the widely discussed among the public subject of increasing the retirement age in men and in women.

Minister of finance Georgios Papakonstantinou briefly presented to the Commission his draft budget for 2010, which aims to decrease the budget deficit with three points—from 12.7% of the GDP in the end of 2009 to 9.4% by the end of 2010. The budget deficit decrease for the upcoming year will consist of 60% income increase, through introducing tax reforms and 40% cutting back on state expenses, though cutting back the heavy state administration.

All this was presented at a press conference in the Ministry of Finances, at the end of which Papakonstantinou announced that between November 16 and 18 this year, a visit by Eurostat representatives is expected, who will come invited by the minister himself, in order to take part in the newly created Independent Commission for data control. Eurostat’s participation is still not confirmed but whatever the decision is, Papakonstantinou said: “Our government insists on transparency in public finances and we are ready to prove it.” 

Tags: European Commission Tobacco Eurostat greek economy
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