The three main conditions that Greece must fulfill to attract healthy business investments are transparency in tenders’ procedure, strong state operation framework and financing from the banks, said Economy and Development Minister Dimitris Papadimitriou in his article in Kathimerini newspaper adding that the reduction of tax rates in enterprises in EU countries did not bring investments.
In his article “Tax reduction and growth” underlined that in countries as Finland, Slovenia and Spain where there was reduction of the tax rates was observed reduction and in the investments. Reduction in investments was also recorded in countries with low tax rates (Croatia, Poland, and Romania)”. On the contrary, in the most advanced economically countries (Germany, France, Belgium, and Austria) despite the high tax rates throughout the period of the crisis, there was not decline but small rise of their investments to GDP.
Particularly in Greece in 2006 the businesses tax rate was 29 percent and gradually fell to 20 percent in the period 2011-2012, this however did not prevent the percentage of investments to GDP to drop from 23,7 percent in 2006 to 12,6 percent in 2012 which is indicative that no reduction in businesses’ taxation guarantees investments, he stressed.
The minister also referred to a recent OECD report in which, among others, points out that “the tax burdening of a country is one of many, but not the most important, factor that is examined by the potential investors that weigh up their investing decisions. Very important for the potential investors are matters related with the cost and the danger linked with macroeconomic or business conditions, the cost of compliance with the laws, the regulations and the administrative practices, the size of the market, the labour conditions and above all the profit opportunities linked with specific locations”.
Concluding, Papadimitriou noted that firstly the reduction of enterprises tax rates has a minor effect on the attraction of investments because it also contributes in a competitive race downwards of the European economy that only benefits the major multinational businesses. Secondly, for Greece which offers a plethora of opportunities for profit from specific locations (due to the infrastructures, tourism, energy and transport) and is under huge fiscal pressure, the economy does not need this kind of policy. What the country needs is transparent tender procedures, strong state framework operation and financing from banks with economic criteria because on these are based the healthy business investments.