Residents of six Greek islands are facing rising living costs, as the government scraps their VAT subsidies.
As of 1st October, Mykonos, Naxos, Paros, Santorini, Skiathos and Rhodes all saw their VAT subsidies ended, which previously allowed them to reduce prices. Tax rates that were once 5 per cent, 9 per cent and 16 per cent will all be raised marginally to 6 per cent, 13 per cent and 23 per cent respectively.
Previously, those lower tax rates were applied to commodities such as food and alcoholic drinks, a measure that was partly to help encourage and support the tourism industry during a time of tight national finances. Greece’s tourism industry, though, has proven resilient during the financial whirlwind of recent years, prompting the country’s latest bail-out agreement to scrap the subsidy.
This is expected to see the cost of such items to rise, affecting not just visitors enjoying lunch and dinner our, but the locals drinking in the bars alongside them.
The rest of the islands are set to see their subsidies scrapped too, although the rollout will be staggered, with some holding on to them for as long as another two years.
For those on the Aegean island of Naxos, the impact is expected to take its toll by officials.
“The VAT increase will definitely have an effect. On the permanent residents initially, and in particular on the pensioners and salaried employees whose purchasing power will be reduced,” Naxos Deputy Mayor Dimitris Lianos tells The Seattle Times .
Christina Kalogera, of the Greek National Tourism Organisation for UK & Ireland, tells The Telegraph that they do not expect a huge impact upon tourism.
“Greece is a very good value destination, offering the highest quality of tourism services to its visitors, who have ranked the country as one of the best destinations worldwide.
“We anticipate that this will still be the case after the change in VAT.”