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Greek island VAT hike not paying off

The increase in value-added tax (VAT) on Greek islands has not paid off, according to comparative data examining VAT revenues at 20 island destinations, including the country’s two largest islands Crete and Evia, tabled in parliament last week.

Implemented in July and October last year, the VAT hikes on products and services — including transport, catering and accommodation — have failed to bring in the forecast revenue.

According to the figures tabled by conservative New Democracy party MP Εvangelos Basiakos, despite the increase in VAT, incoming revenue is lagging, demonstrating a significant reduction in consumption on the islands, thus leading to a decrease in turnover for local businesses and professionals.

Meanwhile, Greek Aegean islands with tourism growth and high per capita income saw a 30 percent VAT rise on all their goods and services as of October 1 last year, as a special reduced tax rate that was applicable until then was abolished.

Sector professionals had warned that the decision would lead to an economic slowdown and have consequences on the competitiveness of Greek tourism.