BUSINESS

Wave of tax hikes adding up to 1.8 bln euros to hit as of July

PROKOPIS HATZINIKOLAOU

TAGS: Taxation, Finance

The government is in the next few days expected to publish and present to Parliament for ratification the second package of tax measures, this time containing indirect levies amounting to 1.8 billion euros through 2018.

If the law is passed and Greece sees a positive outcome from the Eurogroup meeting of May 24, it can expect the disbursement of over 5.7 billion euros, part of which will be directed to the market for the repayment of state arrears to suppliers. Yet in a market that is breaking one negative record after another, the downturn appears likely to continue due to the upcoming increase in value-added tax and a number of consumption taxes, with 10 levies set for go up within 18 months.

The new package, which is seen as particularly harmful on household budgets and will go into effect on July 1, will include an increase in VAT from 23 percent to 24 percent, affecting most commodities for expected additional revenues of 450 million euros. This will be the sixth VAT hike in as many years. July will also see a hike in the special consumption tax on natural gas used for the production of electricity.

Fuel tax will also go up, though as of January 2017. The tax on gasoline will increase by 8-10 cents per liter to bring 200 million euros into state coffers, with the average retail rate climbing to 1.49 euros per liter. Diesel prices will increase by 0.3-0.4 euros, while there is even a plan to raise the tax on heating oil.

A special consumption tax on beer will go up and a 50 percent tax discount on alcoholic drinks in the southeastern Aegean islands will be abolished from January, when the special consumption tax on alcohol, tobacco and electronic cigarettes is bumped up. Meanwhile, there will be a new 5 percent tax on broadband Internet connections and a 10 percent tax on pay-TV.

A hotel stayover tax will apply from January 2018 and come to 1 euro per night spent at a three-star unit, 2 euros at a four-star hotel and three euros at five-star units.

The government will also impose a tax on coffee, coming to over 2 euros per kilo. This means the price of coffee will grow by about 25 percent as of January 2017.

The bill further includes clauses on the adjustment of the Single Property Tax (ENFIA) rates to the new objective values of properties, as well as a new system for taxing vehicles.

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