Under the deal, businesses that decrease their prices by at least 5 pct on three quarters of the items on their menu are going to be allowed to display a characteristic "compliance sign" that will immediately inform consumers that the lower VAT has been factored into their prices.
The sign is expected to be in both Greek and English.
Press reports on Friday said that the agreement also provides for a series of incentives and disincentives to ensure that businesses comply, lower their prices and do not evade taxes.
At the Finance Ministry, it was announced that Minister Yiannis Stournaras confirmed plans to introduce stiffer penalties for businesses that fail to issue receipts, perhaps even by shutting down offending venues, to be announced before August 1. (It is about time!)
The same reports also note that incentives will include additional points for participation in National Strategic Reference Framework (NSRF) programs as well as other actions to support small and middle-sized enterprises for the businesses that contribute to the effort to pass on the price cut on to consumers.
We should also point out that the special sign will be given by local catering sector unions once the businesses applying present price lists and menus with the old and new prices, in addition to a copy of their cash register tapes so their prices can be verified.
An initial idea for giving a different colour sign to businesses that only partially pass on the VAT savings to consumers was abandoned in favour of demanding that all participants reduce prices by at least 5 pct for 75 pct of all menu items, since it was judged that many businesses had already absorbed the VAT cut or had cut prices around this time.
The reduction of VAT from 23 pct to 13 pct means represents a reduction in the final retail price of 8.1 pct.
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