Higher Taxes Kick in for Greece; Banks to Reopen

ATHENS (dpa/TNS) -

Greeks on Monday will pay substantially more in value-added taxes, which was one of the conditions imposed on the country by its creditors before talks would begin on its third bailout in five years. Banks are also to reopen.

The tax increases, from 13 to 23 percent, apply to products and services such as processed foods and drinks and dishes served in restaurants. A sharp increase in consumer taxes on many Greek islands is also set to take effect Monday.

The tax increases are forecast to bring in $867 million by year-end, Greek financial media said.

Parliament approved them Thursday as part of a package of austerity and reform measures Greece’s international creditors required before talks would begin on a new, three-year bailout package the country needs to stave off bankruptcy.

The Greek press on Sunday published lists of the products subject to higher value-added tax. They include fresh and frozen meat, fish, coffee, tea, juices, eggs, sugar, cocoa, rice, flour, dairy products such as ice cream and yogurt, fertilizer and toilet paper.

Once the new austerity program was approved Thursday, the European Central Bank agreed to allow more emergency funding to flow to Greek banks, which were nearly out of cash. As a result, they will reopen Monday after being closed for three weeks.

Transactions, however, will still be limited. Customers will not be able to withdraw money at bank counters but must do so from ATMs as in the previous three weeks, according to a government decree.

Account holders will be allowed to withdraw up to 420 euros ($455) per week. For the past three weeks, depositors have been allowed to take out 60 euros ($65) a day from ATMs.

Restrictions on transfers abroad and other capital controls remain in place because the banks’ financial health remains critical. Transfers of money to other countries are allowed only with permission from the Greek central bank and the Finance Ministry.

Greek credit cards will be able to be used abroad again, but only for purchases and payments of bills, not for cash withdrawals.

Eurozone finance ministers also provided Greece with a $7.6 billion bridge loan so it could meet a $3.8 billion loan repayment due Monday to the European Central Bank and limp through the next few weeks until the new bailout is approved.