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In the middle of next week, the National Federation of Restaurateurs and related professions will announce their decision whether catering establishments in Thessaloniki will be open during the traditional international fair in the northern Greek city. Another punishment the restaurant sector is preparing to censure the Government's decision to increase again the VAT on the services in the sector is not to pay the due tax at the end of the quarter.  

The Federation members call their counterparts to join the I Do not Pay movement because from September 1, 2011, the VAT on restaurant goods and services will be 23%. The new higher VAT value made the businessmen in the sector angry as it is the fourth increase in a row since the beginning of the crisis. Less than two years ago, the tax was only 9%. It was then increased to 11% and when the main value of the VAT became 23%, the tax on food and drink reached 13%. The goods available in restaurants, cafes, bakeries, and taverns have benefited a far lower VAT because they are directly related to catering and tourism - two sectors that are essential for the Greek economy.

Closing the establishments in Thessaloniki during the fair has its advantages and disadvantages. The advantage of this rather extreme measure is that their voice will certainly be heard, but the disadvantage is that entrepreneurs will lose significant revenue when closed during the international event. According to the Union of Craftsmen and Tradesmen in Greece, the 23% VAT puts at risk of bankruptcy over 15,000 small and large catering establishments. This will lead to immediate loss of 80,000 jobs and a further shrinkage of the local economy.

The fast growing recession and lack of immediate measures for solving it resulted in increases in the prices of a range of goods in the country only for a year and had an additional impact on consumption. The National Statistical Institute data show that for the period July 2010-2011 the consumption of fuel has dropped by 17.1%, of food and beverages by 12.8%, of furniture by 12.4% and of clothes and shoes by 12,3%. There is also decline in the demand of essential goods - 5.7%, which is significantly less than the drop in demand of other goods.

This consecutive increase in the tax burden made entrepreneurs in Greece very angry and they decided to punish the greedy public sector by refusing to pay VAT in the next quarter. The initiative for civil disobedience came from the National Federation of Restaurateurs and related professions, which call their members not to pay the tax to the state.

George Kavatas, Secretary of the Union of Craftsmen and Tradesmen in Greece said that the suspension of payments to public sector is a fact. Tradesmen and craftsmen are not able to keep up with the payment of their obligations under constant rising taxes and fees, he explained. At the same time, there are not many steps taken in support of the real economy and the difficulties of SMEs increase.

In the middle of this year, the government tightened the measures against unfair payers and non-payment of VAT can incur serious trouble of businessmen in the catering sector. First, serious criminal charges will be imposed if the VAT is not paid on time, then a fast-track trial could follow and even detention. For now, some owners of restaurants and cafeterias in the sector are adamant they will not pay the VAT, but others are not willing to follow their example.