The possibility of the government increasing the value-added tax on tourism accommodation from the current 6.5 percent to 15 percent would cause a domino of negative effects on the Greek economy, including a 2 percent contraction in gross domestic product, tourism professionals warned on Wednesday.
The Association of Hellenic Tourism Enterprises (SETE) said the hike of over 120 percent could, in the worst case, lead to a GDP reduction of 4 billion euros per year, or more than 2 percent, while the annual growth of VAT revenues after the new rate has settled into the economy (in three to five years) will be no more than 130 million euros at best. This means that for every euro of additional VAT revenues collected, the economy could lose as much as 31 euros, SETE argued.
In terms of employment, the VAT hike would lead to the loss of as many as 220,000 year-round or seasonal jobs in the next five years, the association said.
Its warning comes just one year after official data from the Social Security Foundation (IKA) processed by SETE showed that the volume of employment (work days) in the tourism sector has expanded year-on-year by 23 percent.