Exclusive: Greek PM rules out additional VAT increase
By
Walter Brandimarte
NEW YORK | Thu Sep 23, 2010 10:01am EDT
NEW YORK (Reuters) - Greek Prime Minister George Papandreou on Wednesday ruled out additional increases in his nation's value-added tax, saying the government will find alternative ways to boost revenues.
"There has been of course the possibility of (tax in) some products being raised further, but we're seeing if we can find other ways of getting revenues rather than raising that further," Papandreou said in an interview with Reuters Insider.
Right now, the prime minister added, the government says "'No' to raising the VAT."
Instead, the government wants to fight tax evasion to broaden its tax base. It is also considering cutting taxes in some areas to stimulate investment and support economic growth, Papandreou said.
Greece has introduced a tough austerity program to fight its debt crisis, raising taxes to put its public finances back in a sustainable position.
The government has also requested Lazard, HSBC and Deutsche Bank to advise it on the best way to consolidate the country's banks, which became dependent on liquidity lines from the European Central Bank after Greece's debt crisis shut them out of international credit markets.
Papandreou said that, after expected mergers, Greece should have "one strong public sector bank and two or three big private banks."
Expectations of consolidation in the banking sector have been driving banking shares higher in Greece. In July, Piraeus Bank (
BOPr.AT) offered to buy 77.3 percent in ATEbank (
AGBr.AT) and 33 percent in Hellenic Postbank (
GPSr.AT) from the government for 701 million euros in cash.
Earlier this month, however, the head of ATEbank said a merger with other state banks was a better option for the state-controlled lender. ATEbank was the only Greek bank to fail European stress tests in July.
Papandreou stressed that the situation of Greek banks should improve as Greece emerges from the crisis and capital markets reopen for the country.
He repeated that the government plans to sell bonds on international capital markets as soon as possible, but ruled out any debt issue in 2010.
"We'll do so when we're sure that the markets will respond positively. I don't want to put a date on it," he said.
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