The same sources said that the new tax bill for 2012 will be tabled in September, providing for simplification of the tax scale, reduction of taxation rates, reduction of taxation of businesses, and reduction of VAT, although the main VAT rate will rise to 23 percent. However, the sources cited Papaconstantinou as saying that foods will not be subject to the 23 percent VAT rate.
The sources further cited Papaconstantinou as admitting shortfalls in the implementation of the Memorandum, attributing them to the recession in the economy. He added, however, that the government will not back down on its targets.
The finance minister further noted that the government intends to incorporate two of the proposals recently unveiled by main opposition New Democracy, namely those concerning 'reserve labor' and incentives for the repatriation of capital, which it intends to combine with the purchase of Greek bonds with that capital, the sources added.
Papaconstantinou also assured the Cabinet that the 5th tranche of the 110 billion euros EU-IMF bailout loan will be disbursed to Greece regularly, but the overall solution for the new loan facilitation to Greece, the permanent support mechanism, the Euro-bond and other decisions originally expected to be taken at the EU summit in June will most likely be postponed to the next Summit in September.
The Cabinet meeting lasted to past midnight, as all the ministers took the floor and covered all areas of government policy.