AS GREECE NOW looks set to receive the next tranche of its bailout the prospect that the European Union (EU) may intervene in the country’s tax affairs has become more apparent with a second international bailout likely to be needed.
It had widely been expected that the €12 billion due to Greece as part of its initial €110 billion bailout package from the EU and the International Monetary Fund (IMF) would be paid out following an international inspection by the so-called troika of the EU, IMF and the European Central Bank (ECB).
Agreements were reached yesterday, reports the BBC and the money is likely to be paid out in July.
However the possibility of a second bailout is also looming with as much as €60 billion in extra finance needed in order to see Greece through its current financial crisis and avoid a default.
As the Financial Times pointed out earlier this week, that would mean further “severe restrictions” on Greece with international involvement in taxation and privatisation affairs.
The EU’s top economic official Olli Rehn said last night:
We remain open to explore possibilities for further and reinforced assistance should there be a need, for instance in taxation and privatisation matters.
Writing in the Irish Times, Arthur Beesley points out that Greece’s privatisation initiative – a quid pro-quo last March for an interest rate reduction on its bailout - has made little progress.
The paper points out that Ireland’s refusal to dilute its corporate tax rate led to it being refused a reduction in its average interest rate which is currently 5.8 per cent.
With speculation that Ireland may need a second bailout, the country’s corporation tax rate of 12.5 per cent may once again become an issue if the example of Greece is anything to go by.
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