Hoteliers warn against VAT hike

Tourism professionals vehemently oppose the government’s 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 country’s competitors. He reminded reporters that Turkey has an 8 percent VAT rate for tourism accommodation and catering, while Portugal’s amounts to 7 percent, and Italy’s and France’s 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 of an overnight stay in a 100-euro room to 105 euros.

In contrast, the president of the Hellenic Confederation of Commerce and Entrepreneurship (ESEE), Vassilis Korkidis, said that reverting the 6.5 percent rate to 13 percent “rights the wrong committed in 2011 in the case of all-inclusive hotels, as in the midst of the crisis those units enjoyed privileged treatment by having their services enter the reduced rate of 6.5 percent.”