WRITTEN QUESTION E-0285/01

by Ioannis Marínos (PPE-DE) to the Commission

(9 February 2001)

Subject: Fuel tax in Greece

On 22 December 2000, Commissioner Bolkestein, replying on behalf of the Commission to my question to the Commission (E-3423/00)(1), was kind enough to provide detailed information on the tax in force for various liquid fuels in Greece, confirming that in certain cases (particularly with regard to fuel for industrial use) the Greek Government imposes a much higher rate of tax than the minimum provided for by the Commission.

In addition, I would like know what grounds the Commissioner has for his view that this high level of tax does not necessarily reduce the competitiveness of Greek industrial products, since it is a fact that Greece is the worst of the 15 EU countries in terms of competitiveness.

The Commissioner also rightly emphasises the complex nature of competitiveness, and as an example refers to the impact of the level of social security contributions. Can the Commission say whether the level of contributions in Greece is in fact the highest of the EU countries (with illustrative data for each of the 15 countries), what other factors contribute to the poor international competitiveness of Greek products and what changes should be made to bring about a drastic improvement in competitiveness? Finally, could the Commission say whether, in view of its low level of international competitiveness, Greece's membership of EMU will have adverse effects, and if so, what these will be?

(1) OJ C 174 E, 19.6.2001, p. 52.

Answer given by Mr Bolkestein on behalf of the Commission

(9 April 2001)

The Structure of the taxation system in the European Union, 2000 edition published by the Commission, gives social security contribution as a percentage of gross domestic product (GDP) for all 15 Member States. The annex presents the figures for years 1997 and 2000, which is being sent direct to the Honourable Member and to Parliament's Secretariat.

According to this measure, in comparison with the other Member States, Greece does not have the highest percentage.

With social security contributions representing 10,8 % of the GDP in 1997, Greece is underneath the European average, which is 15 %.

The international competitiveness of a small open economy like Greece's is affected by several domestically generated factors including: the overall macroeconomic situation, the conditions prevailing in the product and labour markets, and the institutional and regulatory framework in place, which affects the business environment, and in particular the administrative burden on companies, the efficiency of the public administration and the system of corporate taxation.

In the run up to Economic and Monetary Union (EMU), Greece has made remarkable progress in correcting macroeconomic and fiscal imbalances. A number of structural reforms has also been introduced in recent years and their impact on the economy has been positive. A sign of the government's commitment towards increased competitive market conditions is the recent decision to allow the sale of majority stakes in partially privatised public companies. A comprehensive tax reform is under preparation and steps are being taken to review the conditions for access to some service professions in order to increase competition. However, the remaining problems in several areas and the need to prepare for future challenges require an intensification of the reform efforts.

In the labour market, the relatively high rate of unemployment suggests that the results of the reforms implemented so far have been modest and a bolder attitude is required, taking into account the remaining rigidities and the government's objective to drastically improve the employment situation.

In the product markets, raising the still low productivity record requires the continuation of efforts for improving the functioning of the markets, increasing competitive market conditions and promoting the development of a knowledge-based society.

As an EMU member since 1 January 2001, Greece has no more monetary and exchange rate policy instruments at its disposal. On the other hand, economic operators should benefit from reduced monetary and exchange rate uncertainty and from lower interest rates implied by accession to the euro zone. Thus, in order to fully benefit from the opportunities offered by EMU participation, it is crucial that an optimal use is made of the other economic policy instruments available, namely appropriate fiscal, incomes and structural policies.