Tax on interest income slashed

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The government decided to slash taxation on interest income from 30% to 17%, Finance Minister Makis Keravnos said, hoping banks will follow suit in boosting revenue for depositors.

During the 2013 financial crisis, the then government doubled the taxation on interest income to 30% as part of the measures to boost depleted public revenue.

After the Cabinet meeting, Keravnos said the measure’s fiscal impact is estimated at €16 mln, noting the decision aims to increase income from deposits held by mainly medium-sized households and enterprises.

“At a time when deposit rates remain compressed, we send a message for the increase of the depositors’ disposable income, and I hope the government paves the way for others to follow,” he said.

The government also decided to extend the implementation of zero VAT on essential goods for an additional six months, adding coffee and sugar to the list of exempt products.

Keravnos said the extension was decided as the current zero VAT period expires at the end of October and concerned bread, milk, eggs, baby food, child and adult diapers and female hygiene products.

Asked whether the government is considering subsidising electricity prices and fuel, Keravnos said the current policy is geared toward targeted measures.

“Government policy concerns targeted measures, which are more effective and comply with fiscal planning and fiscal discipline that we must uphold to keep our economy on the right track.

“We are monitoring the situation with all seriousness and sensibility, and depending on the developments, the government continues to introduce measures to assist those in need.”