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Sharp reactions against the plans for another VAT increase

01 December 2014 / 19:12:56  GRReporter
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Based on the latest information from last night it seems that the already taken government decision to increase VAT on overnight stays from 6.5% to 13% has completely turned around the plans to further develop Greek tourism and increase its contribution to the Greek economy.

According to the president of the Association of Greek Tourist Enterprises Andreas Andreadis, if the worst-case scenario of a 13% VAT ultimately entered into force, over the next two years the country would lose a total of 5 million tourists, 3-4 billion euro in revenues and nearly 200,000 jobs, all this because of a controversial and temporary budget benefit of around 300 million euro.

"This is true economic suicide," said Andreas Andreadis, adding that the negative consequences will become totally apparent within a period of two years.

In connection with the problem, Minister of Tourism Olga Kefalogianni said, "Let us consider the package of measures together with the supervisory Troika to calculate the consequences."

Meanwhile, the Hellenic Chamber of Hotels has also asked Prime Minister Antonis Samaras to intervene. In a letter, representatives of the Chamber emphasize, "At a time when tourism is developing very well, achieving particularly high positions in the preferences of the global market, short-sighted and wrong actions are being taken on the basis of an anti-progressive logic directed only towards the collection of revenues, measures due to which Greek tourism will end up once again in the recent bleak situation, instead of employing actions for its strategic and institutional strengthening in order to ensure its sustainable development."

"Despite the persistent rumours about a significant VAT increase, we continue to believe that you, who have always mentioned tourism as a major economic activity, understand the totally wrong and dangerous orbit in which such a decision puts the Greek economy, and that you will take a firm stance against its implementation, albeit at the last moment," stresses president of the Hellenic Chamber of Hotels George Tsakiris.

The Chamber also states in the letter that the discussed increase in VAT on hotel services will be a severe blow to the viability of companies in the industry, as tourism contracts have already been concluded and the effects on the competitiveness of the tourism product will be disastrous and long lasting.

According to the Hellenic Chamber of Hotels, the adjustment of VAT rates on hotel services to the relevant levels in competitive countries has led to a large increase in the number of tourists visiting Greece, and therefore to an increase in revenues from tourism. According to the Bank of Greece, this growth has had a positive impact on the national economy, the direct result being the positive growth reported in the third quarter of 2014, for the first time since 2008.

In connection with the impending severe blow to tourism, the Chamber notes that the Board will convene an extraordinary meeting tomorrow, 2 December.

Meanwhile, small and medium-sized companies in Greece have also urged the government not to adopt new fiscal measures and not to give in to the demands for a further reduction of security and social benefits and for a change in the VAT rate.

According to their representatives, these decisions will have disastrous consequences on the Greek market and especially for the economy of the Greek islands.

This is the opinion of President of the Hellenic Chamber of Commerce and Industry Vassilis Korkidis in connection with the course of negotiations with the supervisory Troika.

In particular, Vassilis Korkidis said, "... we want, but we cannot, and the creditors who cannot want us to immediately move to the next phase. In view of the present situation and the continually arising problems in the government's talks with the Troika, one wonders whether it makes sense to formulate another appeal for Greece's exit from the impasse. The only thing someone from the industry can think of in relation to the bargaining and the conduct of the negotiations is whether the goal is to ultimately reach a balanced agreement."

Tags: VATIncreased rateSharp reactionsAssociation of Greek Tourist Enterprises
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