Gov't rift over cap on fuel consumption tax

An internal war has broken out within the government on the issue of a special consumption tax on fuel, as the Development and Finance ministries continue to fight over whether there should be a cap to the tax’s level given soaring prices. The average level of gasoline has risen to 1.80 euros per liter.

General Secretary for Trade Stefanos Komninos, who was the first to propose a tax cap, reiterated his position on Thursday despite the rejection by Finance Ministry officials. “The combination of lagging budget revenues and of general fiscal problems render impossible the reduction of the special consumption tax on fuel, at least for the time being,” the officials said.

Asked to comment on their statement, Komninos told reporters on Thursday that there is consensus with the Finance Ministry on the issue, with Deputy Development Minister Sokratis Xynidis proposing, among other measures, the reduction of the tax rate when the refinery prices of fuel go up.

“We are the Ministry for Development and we draft development policies. By raising taxes, you burden the country’s competitiveness, slow down its growth and have a serious impact on product demand and prices,” said Komninos. He added that fuel accounts for a significant share of prices in the market as “about 15 percent of consumer prices arise from logistics and product transport.”

In the effort to lower the fuel tax, the Development Ministry has the entire fuel market on its side, which is also calling for measures to bolster demand.

The union of gas station owners (POPEK) asked yesterday for the abolition of the system of “imposing a tax-on-tax, that is unique to Greece,” referring to the value-added tax on the special consumption tax. That should save consumers some 15-16 cents per liter and bolster consumption, as well as the state’s revenues, POPEK argued. 

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