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| As Banks in Greece Reopen, New Sales Taxes Add to Confusion | As Banks in Greece Reopen, New Sales Taxes Add to Confusion |
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| ATHENS — Greek banks opened their doors on Monday for the first time in three weeks. But with strict limits still in place on the flow of money, the battered economy was far from returning to normal. | ATHENS — Greek banks opened their doors on Monday for the first time in three weeks. But with strict limits still in place on the flow of money, the battered economy was far from returning to normal. |
| As Athens scrambles to meet creditors’ demands in exchange for continuing to negotiate a proposed bailout package worth up to 86 billion euros, or about $93 billion, Monday was shaping up as the beginning of what could be a long economic slog. Even though Chancellor Angela Merkel of Germany called over the weekend for a swift resumption of the bailout negotiations, the talks could take months. | As Athens scrambles to meet creditors’ demands in exchange for continuing to negotiate a proposed bailout package worth up to 86 billion euros, or about $93 billion, Monday was shaping up as the beginning of what could be a long economic slog. Even though Chancellor Angela Merkel of Germany called over the weekend for a swift resumption of the bailout negotiations, the talks could take months. |
| The Athens stock exchange, which stopped trading on June 29, remained closed on Monday, with no word of when it might reopen. | The Athens stock exchange, which stopped trading on June 29, remained closed on Monday, with no word of when it might reopen. |
| And a rejiggered system of value-added taxes — hastily put in place on Monday as part of Greece’s efforts to meet creditors’ demands — seemed to be sowing confusion in its early stages. Some merchants said that, for now, they would simply absorb the higher taxes, rather than pass them on to customers. | And a rejiggered system of value-added taxes — hastily put in place on Monday as part of Greece’s efforts to meet creditors’ demands — seemed to be sowing confusion in its early stages. Some merchants said that, for now, they would simply absorb the higher taxes, rather than pass them on to customers. |
| “I can’t raise the prices. The people won’t tolerate it,” said Loukas Papanastasiou, owner of Loukas’s Cafe. “I will have to find a way to reduce my profit margin.” He is continuing to charge €1 for an iced coffee. | “I can’t raise the prices. The people won’t tolerate it,” said Loukas Papanastasiou, owner of Loukas’s Cafe. “I will have to find a way to reduce my profit margin.” He is continuing to charge €1 for an iced coffee. |
| A higher value-added tax, of up to 23 percent, has been levied on restaurants, travel tickets, and food items like meat, sugar and vinegar. Basic foods like milk, as well as energy and water, will continue to be taxed at 13 percent. | A higher value-added tax, of up to 23 percent, has been levied on restaurants, travel tickets, and food items like meat, sugar and vinegar. Basic foods like milk, as well as energy and water, will continue to be taxed at 13 percent. |
| The changes in the V.A.T. have been so swift that not even the checkout clerk in an Athens supermarket could explain on Monday which items were being taxed at a higher rate and which ones were not. “We’ll just have to figure it out as time goes by,” the clerk said. | The changes in the V.A.T. have been so swift that not even the checkout clerk in an Athens supermarket could explain on Monday which items were being taxed at a higher rate and which ones were not. “We’ll just have to figure it out as time goes by,” the clerk said. |
| The tax increases seemed likely, at least initially, to add to Greece’s financial hardship. And as long as tight controls remain in place on the movement of money outside the country, businesses that rely on foreign suppliers will continue to struggle. | The tax increases seemed likely, at least initially, to add to Greece’s financial hardship. And as long as tight controls remain in place on the movement of money outside the country, businesses that rely on foreign suppliers will continue to struggle. |
| Nikolas Varelas, 37, the owner of Varelas Home Design, in a western suburb of Athens, said the opening of the banks, without an easing of the capital controls, would do nothing to help his business start to recover from the severe blow of an economy that had already relapsed into recession before the controls were imposed three weeks ago. | Nikolas Varelas, 37, the owner of Varelas Home Design, in a western suburb of Athens, said the opening of the banks, without an easing of the capital controls, would do nothing to help his business start to recover from the severe blow of an economy that had already relapsed into recession before the controls were imposed three weeks ago. |
| “This is the worst thing that has ever been done to business in Greece,” said Mr. Varelas, whose company, which sells tiles, faucets, sinks, and other fixtures, was started by his grandfather 75 years ago. “The banks are open today, but because capital controls are still in place, I still can’t pay my suppliers in Italy, Spain and elsewhere in Europe.” | “This is the worst thing that has ever been done to business in Greece,” said Mr. Varelas, whose company, which sells tiles, faucets, sinks, and other fixtures, was started by his grandfather 75 years ago. “The banks are open today, but because capital controls are still in place, I still can’t pay my suppliers in Italy, Spain and elsewhere in Europe.” |
| The higher taxes are part of the new sources of revenue that were demanded last week by Greece’s creditors in exchange for the opportunity to negotiate a new bailout, and to unlock emergency financing to help Greece pay its bills in the coming weeks. | The higher taxes are part of the new sources of revenue that were demanded last week by Greece’s creditors in exchange for the opportunity to negotiate a new bailout, and to unlock emergency financing to help Greece pay its bills in the coming weeks. |
| Athens on Monday repaid the International Monetary Fund about €2 billion in loan arrears and also made a critical €4.2 billion bond payment to the European Central Bank, both organizations confirmed. By making the I.M.F. payments, Greece will again become eligible for financial assistance from the fund. | Athens on Monday repaid the International Monetary Fund about €2 billion in loan arrears and also made a critical €4.2 billion bond payment to the European Central Bank, both organizations confirmed. By making the I.M.F. payments, Greece will again become eligible for financial assistance from the fund. |
| The European Central Bank payment helps give the central bank confidence to continue the emergency lending to Greek banks that enabled them to reopen Monday. | The European Central Bank payment helps give the central bank confidence to continue the emergency lending to Greek banks that enabled them to reopen Monday. |
| The money for those repayments came from a €7.16 billion bridge loan that the European Union approved on Friday. That loan was granted after Greek lawmakers legislated a raft of tax increases and spending cuts during an acrimonious session that prompted numerous members of Prime Minister Alexis Tsipras’s Syriza party to defect. | The money for those repayments came from a €7.16 billion bridge loan that the European Union approved on Friday. That loan was granted after Greek lawmakers legislated a raft of tax increases and spending cuts during an acrimonious session that prompted numerous members of Prime Minister Alexis Tsipras’s Syriza party to defect. |
| On Wednesday, Parliament is to take up a second set of measures required by the creditors, including adoption of a new civil code meant to help speed court cases through Greece’s notoriously slow judicial system, as well as enacting eurozone banking rules meant to help keep banks solvent and allow for the orderly shutdown of ones that are not. | On Wednesday, Parliament is to take up a second set of measures required by the creditors, including adoption of a new civil code meant to help speed court cases through Greece’s notoriously slow judicial system, as well as enacting eurozone banking rules meant to help keep banks solvent and allow for the orderly shutdown of ones that are not. |
| Those legislative steps are needed before bailout negotiations can fully resume between Greece, its European creditors and the International Monetary Fund. And still to be taken up by Parliament in coming weeks are other measures being demanded by the creditors, including further revisions to the pension system and an end to special protections for farmers. | Those legislative steps are needed before bailout negotiations can fully resume between Greece, its European creditors and the International Monetary Fund. And still to be taken up by Parliament in coming weeks are other measures being demanded by the creditors, including further revisions to the pension system and an end to special protections for farmers. |
| Monday’s reopening of the banks did at least help relieve bottlenecks at A.T.M.s, where people had been waiting in long lines every day since June 29 to withdraw a daily maximum of €60. That limit remains, but Greeks now have the option of withdrawing it in a weekly lump sum of €420. | Monday’s reopening of the banks did at least help relieve bottlenecks at A.T.M.s, where people had been waiting in long lines every day since June 29 to withdraw a daily maximum of €60. That limit remains, but Greeks now have the option of withdrawing it in a weekly lump sum of €420. |
| Nicholas Pagoulatos, 70, a retired merchant sea captain, took €60 from an A.T.M. at an Alpha Bank in central Athens on Monday and shrugged. “It’s much more convenient,” he said, referring to the new once-a-week withdrawal limits. “You can get money when you want to.’’ | Nicholas Pagoulatos, 70, a retired merchant sea captain, took €60 from an A.T.M. at an Alpha Bank in central Athens on Monday and shrugged. “It’s much more convenient,” he said, referring to the new once-a-week withdrawal limits. “You can get money when you want to.’’ |
| But Mr. Pagoulatos said that because he was a retiree, the capital controls and the higher taxes were the least of his complaints. His big concern was that his pension had been cut by €10,000 a year over the past few years. | But Mr. Pagoulatos said that because he was a retiree, the capital controls and the higher taxes were the least of his complaints. His big concern was that his pension had been cut by €10,000 a year over the past few years. |
| Given those cuts, and his concerns that there could be further pension reductions ahead, the higher sales taxes did not disturb him, he said. | Given those cuts, and his concerns that there could be further pension reductions ahead, the higher sales taxes did not disturb him, he said. |
| “The V.A.T. is small potatoes,” he said. “They say they will cut a small amount from my pension, but I won’t lose it. It will go toward my health, to the hospital or drugs.” | “The V.A.T. is small potatoes,” he said. “They say they will cut a small amount from my pension, but I won’t lose it. It will go toward my health, to the hospital or drugs.” |
| But Mr. Papanastasiou, the cafe owner, predicted a backlash over the sales taxes. | But Mr. Papanastasiou, the cafe owner, predicted a backlash over the sales taxes. |
| The same had happened, he said, the last time the value-added tax rose to 23 percent, during a temporary increase imposed in 2011. Many cafe and restaurant owners then did not raise their prices and swallowed the difference. But, he said, with shrinking profit margins, businesses could not afford to pay their own taxes, and ultimately the state was the loser. That increase was rescinded in 2013 by the coalition government of Prime Minister Antonis Samaras, which was swept out of office early this year by the Syriza party. | The same had happened, he said, the last time the value-added tax rose to 23 percent, during a temporary increase imposed in 2011. Many cafe and restaurant owners then did not raise their prices and swallowed the difference. But, he said, with shrinking profit margins, businesses could not afford to pay their own taxes, and ultimately the state was the loser. That increase was rescinded in 2013 by the coalition government of Prime Minister Antonis Samaras, which was swept out of office early this year by the Syriza party. |
| The new tax increases come atop the damage already done to the economy in recent weeks from the bank closings and capital controls, which prompted Greek consumers to sharply reduce purchases of almost everything but basic necessities. | The new tax increases come atop the damage already done to the economy in recent weeks from the bank closings and capital controls, which prompted Greek consumers to sharply reduce purchases of almost everything but basic necessities. |
| One businesswoman, Despina Chrisikopoulou, did see a bright side to the reopening of the banks. During the three weeks they were closed, said Ms. Chrisikopoulou, an importer and wholesaler of interior design goods, she had not even been able to reach a bank employee. | One businesswoman, Despina Chrisikopoulou, did see a bright side to the reopening of the banks. During the three weeks they were closed, said Ms. Chrisikopoulou, an importer and wholesaler of interior design goods, she had not even been able to reach a bank employee. |
| But on Monday, she was finally able to get through, so that she could place her company, Antzoulatos Demas, on a waiting list of businesses that need to send cash outside Greece to make payments on goods they cannot do without. Ms. Chrisikopoulou has outstanding orders in Hong Kong, Indonesia and other places in Asia. | But on Monday, she was finally able to get through, so that she could place her company, Antzoulatos Demas, on a waiting list of businesses that need to send cash outside Greece to make payments on goods they cannot do without. Ms. Chrisikopoulou has outstanding orders in Hong Kong, Indonesia and other places in Asia. |
| But she said the bank had established a priority list for businesses, with necessities like pharmaceuticals at the front of the line, and she was far down the list. | But she said the bank had established a priority list for businesses, with necessities like pharmaceuticals at the front of the line, and she was far down the list. |
| “I probably will have to wait a month, maybe more,” she said about being able to pay for goods overseas. But still, she was relieved to be on the list and to have the feeling that she was making some progress. | “I probably will have to wait a month, maybe more,” she said about being able to pay for goods overseas. But still, she was relieved to be on the list and to have the feeling that she was making some progress. |
| For now, capital controls have practically frozen the Greek economy, said Nicolas Vassiliou, the owner of Bright, an exporter of premium lighting systems based on the outskirts of Athens. Even household clients were no longer buying from him, he said. “They are just keeping their money in their mattress, or spending on basic goods.” | |
| The capital controls have also stopped him from paying his foreign suppliers, with whom he has had business relations for years. Many were sympathetic to his situation, but refused to extend him credit or an additional helping hand. | The capital controls have also stopped him from paying his foreign suppliers, with whom he has had business relations for years. Many were sympathetic to his situation, but refused to extend him credit or an additional helping hand. |
| “It’s not that they don’t trust Bright,,” he said. “But they don’t trust the Greek economy or the Greek government.” |