ECONOMY

Tourism sector illustrates error of VAT hike in food catering

The increase in value-added tax on food catering has led to a 37 percent decline in the sector’s turnover over the 2011-12 period, while state revenues from VAT grew by just 2 million euros, against a plan for a 1.4-billion-euro increase, according to a study by the Association of Hellenic Tourism Enterprises (SETE).

The association argues that a reduction of VAT from 23 percent to 13 percent would lead to a VAT revenue loss of just 64 million euros in total for the rest of this year and 2014, while helping the sector’s turnover grow by 1 billion euros and providing jobs to many of the 50,000 who have been made unemployed in the sector.

SETE chief Andreas Andreadis stated on Tuesday that these fully confirmed figures illustrate how wrong the decision that the Finance Ministry made in spring 2011 was, as it has led to big job losses, particularly for younger employees, not to mention the huge social and fiscal cost from the reduction in income tax revenues and social security contributions.

Andreadis expressed certainty that the prime minister would do everything possible to convince the representatives of the country’s international creditors in their meeting on Thursday to correct that error.