Plans to increase the rate of value-added tax (VAT) charged by restaurants and tavernas to 23 percent from September 1 were slammed by opposition parties on Tuesday, with New Democracy claiming that it would inflict serious damage on the tourism industry and lead to many people losing their jobs.
The rise from 13 to 23 percent, a hike of 77 percent, was agreed between the government and the European Union and the International Monetary Fund as part of the medium-term fiscal package passed in July. Greece had asked for the increase to apply from September to limit the disruption to the tourism industry.
However, government officials have dropped hints this week that the VAT rate for restaurants and hotels may be dropped again in October. This sparked a reaction from the opposition parties, who called for the rise to be shelved completely.
ND said it would be an ?exercise in futility? to raise VAT briefly and argued that the results of previous tax increases by PASOK have been questionable. ?The rise will have catastrophic economic and social consequences,? said ND?s deputy economic affairs spokesman Yiannis Vroutsis. ?As has been proved in practice, rises in tax rates leads to a fall and not a rise in revenues.?
Vroutsis said that Greece had secured the right to lower VAT for eateries when it joined the European Economic Community in 1981. He also claimed the VAT charged by restaurants in other countries, such as Italy, France, Cyprus and Portugal, is both lower than in Greece and below the top rate in each country.
The Communist Party (KKE), Popular Orthodox Rally (LAOS) and the Coalition of the Radical Left (SYRIZA) also issued statements calling on the government to scrap the tax rise.