Greece Slaps 18% Tax on Tourists
Tourists to Greek islands will be forced to pay an 18 percent tax on hotel and restaurant bills so that Athens can raise money to appease Brussels, The Australian reports.
The plans were denounced as “catastrophic” by heads of tourism and came as officials at the European Central Bank drew up plans for a parallel currency for Greece as the country hurtles towards bankruptcy. Yves Mersch, a member of the bank’s executive board, admitted that there were preparations for a Greek default.
“There are intermediate solutions circulating, such as the issuance of a parallel currency or IOUs,” he told the Spanish newspaper La Vanguardia. “All these measures are among the exceptional tools that any government can consider if it has no other options. But all of them have a high cost.”
The Greek government is refusing to surrender austerity “red lines” to the eurozone ahead of negotiations on Monday, raising the prospect of the ECB pulling the plug on the country’s banks.
Greece is defying pressure from the eurozone and the International Monetary Fund to cut pensions and deregulate legislation that protects workers, in talks to unblock EUR 7.2 billion in loans to the Greek government.
Under the new plan, VAT would be set at 18 per cent and replace the multitude of rates now in force. The tax on restaurant bills in the islands would rise from 13 per cent to 18 per cent, while that on accommodation would nearly triple from 6.5 per cent. The reform is considered crucial to unblock billions of euros in aid and ease a four-month deadlock in bailout talks with Brussels and the IMF. European negotiators had demanded that Athens come forward with radical measures to win the funds to pay Greek public sector staff.
“It’s catastrophic,” said Andreas Andreadis, head of the Confederation of Greece Tourism. “What are millions of Britons and Germans going to do after having made bookings and paid for package deals this summer? It’ll probably scare them off.”
Like Spain, Portugal and Italy, Greece relies heavily on tourism, which accounts for about 20 per cent of its gross domestic product and one in five jobs. With 25 per cent of the country’s workforce unemployed and a seven-year recession biting deep, the stakes are high for the tourist season.
