Tsakalotos defends gov’t decision to scrap discounted VAT rate for Aegean islands

Finance Minister Euclid Tsakalotos on Friday defended a government decision to scrap the discounted rate of value added tax enjoyed by the Aegean islands, noting that the move was one of the few things on which he had seen eye-to-eye with Greece's creditors.

In comments on ANT1 television, Tsakalotos said, " the way to help people who have problems on the islands is not via VAT" but via growth. The minister noted that VAT rates should be the same across the country without discounts in particular areas.

Tsakalotos's comments came just a few days after Defense Minister Panos Kammenos, who is also the leader of the junior partner in the coalition, Independent Greeks, labeled the scrapping of the discount on VAT enjoyed by some Greek islands as “criminal and unconstitutional." Parliament Speaker Nikos Voutsis adopted a similar stance to Kammenos.

Tsakalotos also conceded that the bulk of the measures approved in Parliament last weekend were "painful" and "recessionary." "I understand that people will struggle," he said but indicated that the government had done whatever it could to minimize the austerity.