The reduction of value-added tax in the food service sector is the only piece of good news we have had in regard to the easing of a tax among the countless imposed following the first memorandum.
Going back to the earlier rate was deemed so important by the government – amid all the gloom of investment flight and negative inflation – that Prime Minister Antonis Samaras was prompted to appear in a special televised address, though he appeared to be looking somewhat awkward and down in the mouth – the desperate need for some good news trumped the constant need for seriousness and realism.
So be it. But what can we expect from the tax reduction? Lower prices perhaps? This is out of the question given that restaurants and bars have already exhausted whatever margin they had in terms of reducing prices. But even if in some cases prices were to be lowered, the people would experience only a minimum amount of relief – after all, it’s not restaurant bills that burden the budgets of exhausted Greek households, but the prices of standard consumer goods.
Let us hope that from now on businesses will pay VAT and issue receipts, generating revenue for the cash-dry state coffers. This is the only benefit that can be expected from the reduction. Because at the same time, the news coming from the tourism sector is rather bleak, as recent inspections by the financial crimes squad have shown: tax evasion, ranging from 50 to 85 percent, appears to be the easiest way to survive and to earn some kind of – undeclared – income for many businesses that depend on tourism.
The crisis, meanwhile, has also multiplied undeclared labor. Only one in three employees working in accommodation facilities, restaurants and bars operating in tourist areas has social security. This kind of revenue loss puts an additional strain on the country’s already bankrupt social security system while at the same time establishing new employment conditions: the purgatory of unregistered workers standing alongside unpaid or underpaid apprentices.
This is what it has come to: an underground economy, underground labor, high recession and record unemployment. Along with the tax and social security dinosaurs, the rushed reforms that have taken place in the past few years have succeeded in destroying the national economy, healthy entrepreneurship and Greek citizens.