A bailout deal for Greece must be agreed today. At least, that is the latest from Brussels insiders – a more positive message than the doom and gloom pouring forth from anyone near a microphone earlier this week, but a line that’s been heard before.
Concessions made by the Greek government – most significantly, increased employee contributions to make up for shortfalls in pensions – are largely behind the newfound optimism, but prime minister Alexis Tsipras faces mounting dissent from within his own Syriza party as a result.
“It’s always back and forth,” said George Kallitsis of exporter Protofanousi Fruits. “A deal is about to come and then it’s not. It seems likely there will be one this time, but we don’t yet know what it will include. Any deal also needs to be accepted by the Greek parliament as well as the EU, and who knows if a majority will vote in favour?”
Even if Tsipras is able to reach an agreement with better terms, Kallitsis remains uncertain whether the Greek government would give the private sector sufficient room to breathe.
“They are taking care of the public sector first,” he said. “Companies earning €1m in profit were originally made to pay a higher tax, 12 per cent higher. Now they have lowered the threshold to €500,000. They are also increasing the national insurance that companies need to pay for employees.”
Kallitsis said more needed to be done to stop tax avoidance, rather than increasing taxes. “There is still a lot of tax avoidance, but instead of addressing this the government is trying to take more tax from the companies that are already paying,” he said. “Also companies mostly involved in exports are supposed to get the VAT back, but payments are being severely delayed and the salaries of public sector employees paid first. In order to get through the recession and return to growth, these things need to change.”
