No news is bad news

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an empty beach in Greece - the worst fear of the Greek tourism industry if Vat rises too far

an empty beach in Greece – the worst fear of the Greek tourism industry if Vat rises too far

I’m not sure that the expression is accurate especially if you are holidaying in Greece this year.

The Greek government is expected to raise the VAT payable on accommodation and on other items as well. If it does, then who pays for the increase in the holiday bills? Does the hotelier or the tour operator absorb the increase for fear of putting off travellers from booking holidays there or do they pass it on to you and me as a surcharge when we arrive?

The answer is probably that it depends on how much of an increase the Greek government imposes. At present the rate is 6.5%. If it goes up to 8% then the cost will probably be absorbed rather than upset holidaymakers. But if it goes to 10, 12 or as some Greek newspapers have suggested, 19% – a threefold increase almost – then the cost will be passed onIf that were to happen, what would be the effect on the number of visitors to Greece? The  Association of Hellenic Tourism Enterprises (SETE) has already reduced its estimates from the 25 million people they were hoping for and may have to do so again if that VAT jumps to the higher end of suggestions.

SETE had estimated that tourism would be worth €14 billion to the Greek economy. Any reduction in that sum could hit Greece and lose more than would be raised by leaving VAT where it currently is. There are, no doubt, statisticians in the government trying to calculate that very same equation.

And when might we know what this rate will be? The betting is sometime this week or, at the latest, next.

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