Lower taxes on natural gas in Greece could bolster industrial competitiveness and boost taxable revenues in the sector, a recent study conducted by IOBE, the Foundation for Economic and Industrial Research, has shown.
Natural gas prices in Greece are 33 percent higher than the EU average. Comparing figures with neighbors Bulgaria and Turkey, natural gas prices in Greece are 42 percent and 72 percent higher, respectively, despite the fact that all three countries import natural gas at about the same price.
An obligation by Greece to review tax policies in the energy sector includes a pledge to revise its special consumption tax (EFK) imposed on natural gas, a European Commission official has told euractiv.gr.
Sector analysts argue that taxes imposed on natural gas in Greece are applying significant pressure on the efforts made by local industry to remain sustainable, affecting the sector’s competitiveness, internationally, and increasing production costs.
Greece’s tax policy for natural gas runs contrary to an EU directive, dating back to 2003, on energy-sector taxes. The country’s special consumption tax of 5.4 euros per MWh imposed on gas since 2011 is ten times higher than the minimum level set by the EU for professional use and five times higher than the minimum level set for non-professional use.
The recent IOBE study showed that a reduced special consumption tax on natural gas could boost Greece’s GDP and create new jobs in the long term. Although revenues generated by the specific consumption tax would decrease, the overall increase in economic activity, including stronger tax revenues derived from greater corporate profit figures, as well as the increased amount of social security fund payments generated by higher employment levels, would more than offset the initial loss.
According to the IOBE study, a reduction of the special consumption tax imposed on gas to the minimum level set by the EU directive could increase Greece’s GDP figure by 754 million euros and create 12,500 new jobs.