Wednesday, June 22, 2016

Opposition leader Mitsotakis warns Greek tax rises will stifle growth

by Kerin Hope

Financial Times

June 22, 2016

Kyriakos Mitsotakis, Greek opposition leader, has a blunt message for the country’s international creditors and Alexis Tsipras, its leftwing leader: tax rises that the prime minister insists are central to Greece’s recovery are a costly mistake.

He said the fiscal measures rolled out this month as part of a €5.4bn austerity package agreed with the EU and the International Monetary Fund in return for more bailout cash will stifle growth, cut revenues and push many more Greeks into tax evasion and the black economy.

“What you have is the cumulative impact of taxation that goes well beyond … capacity [to pay]”, Mr Mitsotakis told the Financial Times. “After five years, many people have literally run out of money.”

Following a warning from the Greek central bank that “excessive emphasis” in higher taxes could backfire, Mr Mitsotakis insisted the government should have focused on structural reforms, such as to the public sector, which would have made tax increases unnecessary.

“This country has both a culture and considerable expertise in tax evasion,” Mr Mitsotakis said. “That’s why the Tsipras [plan], which the EU ended up approving, isn’t going to work.”


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