Tourism losses will dwarf state collections from a VAT hike on hotel services

If a government measure doubling value-added tax is applied in the case of accommodation services, tourism sector losses will range from 415 million to 680 million euros in the first year alone, according to an Ernst & Young study.

Long-term losses will amount to 1-1.7 billion euros, leading to total reduction of 3 billion euros, or 1.4 percent of gross domestic product.

The current VAT rate on hotel services is 6.5 percent, but the country’s creditors have reportedly agreed to a Greek proposal for a hike to 13 percent.

The study, presented on Wednesday, foresees tax revenues from the measure growing by a maximum of 200 million euros this year.