Road tax hike for tuition VAT?

The government is now considering replacing the value-added tax on private education with an increase in road tax revenues. For now, the Finance Ministry intends to extend the grace period for allowing educational institutions not to pay the 23 percent VAT until the government has found adequate offsetting measures, Alternate Minister Tryfon Alexiadis has decided.

The draft law that will reach Parliament in the coming days will include clauses for the extension of the grace period for the VAT on education, as well as amending customs legislation and for the incorporation of the Financial Crimes Squad (SDOE) into the General Secretariat for Public Revenues following the dismissal of general secretary Katerina Savvaidou. The ministry also wants to have the road tax amendment seen applying as of 2016 ready for inclusion in the upcoming draft law, possibly waiving the tuition fee VAT.

The grace period for the adjustment of private educational institutions to the 23 percent VAT system (in other words the application of the measure) will likely be extended up to November 20. This time the government has chosen the parliamentary path for the extension, given that the previous interventions were precariously close to violating the legislation that dictates a maximum grace period of 10 days.

A top government official said that during this new extension the government will try to find offsetting measures so as to abolish the VAT on education altogether, after the European Commission refused to approve the reduced VAT rates of 6 percent and 13 percent the education minister had spoken of.

Road tax revenues are expected to increase through the tax hike on expensive vehicles and on cars with large engines. Furthermore, vehicles that were hitherto exempt from road tax, such as diesel-powered, electricity-powered or hybrid cars as well as several categories of motorcycles will now have to pay road tax for the first time.