EUROZONE-GREECE/BUSINESS REACTION Greek retailers say proposals will dent recovery hopes

Record ID: 152023

  • Title: EUROZONE-GREECE/BUSINESS REACTION Greek retailers say proposals will dent recovery hopes
  • Date: 23rd June 2015
  • Summary: ATHENS, GREECE (JUNE 23, 2015) (REUTERS) VARIOUS OF PEOPLE ON SHOPPING STREET VARIOUS OF WOMAN LOOKING AT GOODS IN SHOP WINDOW VARIOUS OF JEWELLERY STORE OWNER EDDIE KALFAYAN SPEAKING TO A FRIEND INSIDE HIS SHOP JEWELLERY IN GLASS CASE (SOUNDBITE) (Greek) JEWELLERY STORE OWNER, EDDIE KALFAYAN, SAYING: "All these taxes, raising our tax to 29 percent, increasing VAT, they (t
  • Embargoed: 8th July 2015 13:00
  • Keywords:
  • Location: Greece
  • Country: Greece
  • Topics: General
  • Reuters ID: LVA1UGXYSJYCJIG62LWCZTXZAQB5
  • Aspect Ratio: 16:9
  • Story Text: The Greek retailers association said on Tuesday (June 23) the prime minister's budget proposals will have a negative effect on small and medium-sized firms and thwart recovery.
    But they added that rescuing Greece from a eurozone exit was a positive.
    The Greek proposal of reforms to fend off bankruptcy and stay in the euro includes tax revenues and some spending cut equivalent to 7.9 billion euros by the end of 2016.
    Under the proposal, Greece plans to impose a 12 percent one-off tax on businesses with profits of more than 500,000 euros, aiming at cashing in 1.35 billion euros by next year.
    It also wants to raise corporate tax by 3 percentage points to 29 percent to secure revenues of 410 million euros in 2016.
    Businessman Eddie Kalfayan owns a jewellery store in central Athens. He says he is barely surviving as it is. Some months he does not break even.
    His were the first goods to be stuck off the shopping lists of cash-strapped Greeks trying to cope with lower incomes, higher taxes and the soaring cost of living in the last five years of austerity.
    "All these taxes, raising tax to 29 percent, increasing VAT, they all target business owners and are burdening them at a time when we are in a very bad state. We, the shops are all in the red, and I am too," he says.
    The only reason he has managed to keep his shop open is because his rent came down. Many landlords have had to slash rents when businesses started shutting.
    The dilemma for Kalfayan is that he wants Greece to stay in the eurozone. Without a deal, that scenario was highly unlikely and the risk of 'Grexit' was high. So he is pleased the Tsipras seems to have guaranteed Greece's place within the European economic bloc.
    But he is angry that the PM is trying to save public sector workers by re-hiring some and reversing planned cuts in their salaries at the expense of private business.
    "All they care about is for public servants to keep their positions. Of course it's good, that their wages and pensions are not being cut, that is very good, but all the weight is being shouldered by free enterprise, and we who own small businesses are struggling just to stay open. So I do not agree with these proposals."
    Greece's economy contracted by 0.2 percent in the first quarter, dipping back into recession after a fragile recovery last year. It is expected to expand by only 0.5 percent this year based on the latest EU Commission forecasts.
    More importantly right now, the government has to pay a 1.6 billion euros IMF loan and needs access to frozen funds to do so. But lenders demanded the government agree and implement more painful reforms before doling it out.
    And so some business owners, like Maria who runs a clothes shop, are more philosophical.
    "Of course we are worried but what can we do? There is no other solution. We must choose the lesser of two evils," she said.
    "We are going through a difficult time, but we all need to show patience, not start throwing stones at Greece. We have to stop abusing ourselves."
    The new proposals are sure to be perceived by Prime Minister Alexis Tsipras's supporters as a climbdown from his pension and VAT "red lines".
    Some lawmakers have already said they will fight against it in parliament and he could face a revolt within his own party from the more radical left members.
    Sixty-year old pensioner Panayiotis Ksenos warns this could lead to snap elections if Tsipras loses too much support in the parliament.
    Pensioner Mavraki Lina, who did not vote for Tsipras's Syriza party accused him of wasting five months in power to return the same austerity measures the previous government was kicked out for.
    "We've already been squeezed to the limit, so I don't think this is a good thing. I think everybody will disagree," said Ksenos.
    Lina Mavraki predicted the measures would be painful, adding: "I don't understand what they were doing for five months if the result was to be this."
    Opinion however is divided. Bank employee Jove Panagiotidis the prospect for the future of Greece is bleak. But he believes it would have been worse without a deal.
    "For sure, it will be yet another burden on the people, on workers, on families. Of course, in this way we avoid the worst but the problem remains, and it looks like it will stay that way for the forseeable future," he said.
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