Life will get even more expensive for Greeks as of next month following the government’s decision to raise a number of taxes, such as the value-added tax on most commodities and the special consumption tax on fuel, tobacco and coffee, as well as hikes on landlines, Internet and pay-TV.
The increase in the prices of a large number of goods will obviously lead to a reduction in consumption, which in turn will reduce state revenues, meaning that the government won’t meet the target it has set itself and agreed on with the country’s creditors.
According to the clauses of the multi-bill tabled in Parliament that will be passed into law on Sunday night, all products carrying the top VAT rate of 23 percent will undergo a fresh hike to 24 percent as of June 1. This concerns standardized food (pasta, rice, flour, coffee, cold cuts, chocolate, ice creams spices, packaged bread, refreshments and juice). Also set for hikes are public transport tickets, ferry, air and taxi fares, and food service.
The VAT hike is not the only factor that will see prices rising. The transport of goods will also become more expensive as gasoline and diesel will rise by three to five cents per liter due to the increase in the special consumption tax on fuel, followed by a rise of five to six cents per liter on heating oil as of October.
Tax on cigarettes is set to climb from 20 to 26 percent, and even the liquids used in electronic cigarettes will see their prices go up. The price of coffee will rise by two to four euros per kilo.
From January 2017 telecommunication companies are expected to pass the tax imposed on them by the government on to their clients. This amounts to 5 percent on the monthly bill for landline and Internet services, on top of which VAT will be imposed.
Similarly, pay-TV companies will have to add a 10 percent charge to each monthly bill as of June 1, 2016, including the fixed payment customers pay to the service supplier, before VAT. That means pay-TV viewers will also pay VAT on the extra tax they now pay.