E. Aegean Islanders Ringing Alarm Bells Ahead of 2017 Tax Hikes

Mytilini town, Lesvos. Photo © Koutrolm / Wikimedia Commons

Eastern Aegean island professionals are ringing alarm bells in view of VAT tax hikes to take effect January 1 and are calling on the government to apply taxation rates that were applicable in 2015.

As of the new year, the islands will be faced with a VAT rise from 5 percent to 6 percent for medicine and books; from 9 percent to 13 percent for services, fresh produce and tourism accommodation; and from 17 percent to 24 percent — up by 50 percent — for fuel, packaged food, catering services, taxi fares and transport.

Vathy, Samos

A special tax status in place to boost competitiveness of remote islands or communities with minimal tourism activity which foresaw a 30 percent discount on VAT rates for all products and services will be abolished on January 1.

Islanders are saying that the VAT rise and the end of the special tax status will be a final blow to tourism there as many of the islands are in the middle of the ongoing refugee crisis. As a result, they say, the increased cost will be passed on the customer, who is already according to recent data spending much less.

Local entrepreneurs are saying the tax increase will particularly affect small- and medium-sized businesses dependent on tourism and local products will be unable to retain competitive prices.

Indicatively, despite higher incoming traffic to Greece this year, arrivals at islands bearing the brunt of the migrant crisis dropped by 11.2 percent, 23 percent and 57.3 percent on Kos, Samos and Lesvos respectively — islands which have been on the receiving end of migrant flows from Turkey.

Rhodes, Santorini, Mykonos, Naxos, Paros and Skiathos were the first islands to lose the special tax status in October 2015.