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Troika Enforced Indirect Taxes Fuel Inflation

A study by the Bank of Greece (BoG) reveals that successive increases in indirect taxes and VAT (value added tax) during the three years of memorandum implementation have been fueling inflation.

The study reveals that these increases happened because of direct troika pressures, while at the same time it pressed, and got, destructive pay cuts resulting in what was tantamount to an internal devaluation.

As comes out of the study, inflation in 2010 stood at 4.7%, and if the increases in indirect taxes had not been enforced it would have stood at 1.38%. The picture is the same for 2011, where inflation stood at 3.1%, and would have stood at 1.15% without the tax increases, while in 2012 when inflation was hemmed in at 1%, the additional burden from these taxes was 0.91%, which would mean real inflation would have been next to nil.