Hoteliers warn against VAT hike
Increase of tax on accommodation could wipe 3.8 bln euros off the countrys GDP and cause job losses
Tourism professionals vehemently oppose the governments intention to raise the value-added tax on accommodation from the current 6.5 percent to 13 percent.
According to the calculations of the Association of Hellenic Tourism Enterprises (SETE), the hike would lead to moderate VAT revenue growth of 283 million euros, but would also slash gross domestic product by up to 3.8 billion euros.
At a press conference regarding the possible VAT hike, SETE head Andreas Andreadis on Monday described such a move as fiscal suicide. Citing the analysis of economic scenarios for 2015 by SETE Intelligence, he stressed that the implementation of the measure would generate a negative domino effect in the economy, reducing GDP by over 2 percentage points, and that it would also have a dramatic impact on the labor market, as for every million tourists missed out on, some 30,000 jobs would be lost. Andreadis added that the impact on the flow of tourists would amount to 2.5 million fewer next year and even greater losses in 2016.
Andreadis warned that if the VAT rate on accommodation doubles, hotel enterprises will be forced to renegotiate with tour operators, rendering Greek tourism less competitive and pushing millions of tourists toward the countrys competitors. He reminded reporters that Turkey has an 8 percent VAT rate for tourism accommodation and catering, while Portugals amounts to 7 percent, and Italys and Frances stand at 10 percent.
Hellenic Hoteliers Federation president Yiannis Retsos added that hotel enterprises will be forces to roll the extra cost over to their guests. The first estimates point to a hike of 5 percent that would take the cost...
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