A package with indirect taxes and special consumption taxes and fees worth 1.8 billion euro is expected to be submitted to the Parliament on Tuesday or Wednesday and be voted before the Eurogroup meeting on May 24th. The package can only be compared with an everything-sweeping hurricane, tsunami and volcano explosion at the same time as it will skyrocket the cost of Greek austerity- and recession- life; for one more time since 2010, while the real economy is still in recession, unemployment is stuck between 24% and 25% and salaries are in average 600-700 euro.
Value Added Tax, fuel, coffee, cigarettes & tobacco, alcohol, private vehicles, fixed telephone lines, cable television, tourism industry
Hikes as of June/July 2016
The most horrendous part of the hikes is the Value Added Tax rise from 23% up to 24% as of 1. July 2016. It will be the 5th VAT hike since 2010. It is expected to bring revenues 450 million euro. The VAT hike will affect every good purchase and services, including public transport tickets. Ticket prices in Athens went up from €1.20 to €1.40 beginning of the year, anyway. For many goods incl food items the VAT rose from 13% to 23% in July 2015.
We all know that VAT hike do not translate in real life as a price hike of the exact percentage but a little higher…
Private Vehicles: Change in the calculation of registration fees for vehicles. They will occur according to the retail price of the car and not according to <cc>. More details on vehicle/in Greek here.
Fuel prices: Hikes in special consumption tax: 5 cents/liter in gasoline ⇒ 4-3 cent in end price taken into consideration also the VAT hike. 8 cents/ liter in diesel ⇒ 10 cents in end price.
It is not clear yet, whether there will be hike in LPG -unconfirmed information speak of hike expected to be 0.25 cents -, while the Finance Ministry examines the possibility of hikes in natural gas used by the industry.
Additional charge of 6 cents per liter of heating oil as of 15. October 2016.
Cable TV: an extra fee of 10% on the bill before the VAT as of 1. June 2016
Beer: retail price will be increased (percentage not revealed yet) – Why beer? I guess, because there are many local beer brewers and they will have to pay the price for running a business in Greece.
Alcoholic Drinks: the special reduction of 50% for the island group of the Dodecanese will be scrapped
Scrapping VAT deductions on the islands: Sweeping price increases in goods and services are expected on the islands (Syros, Thassos, Andros, Tinos, Karpathos, Milos, Skyros, Alonnisos and Sifnos) as of 1. July 2016, as the VAT deduction of 30% will be scrapped. This was a government commitment to lenders in summer 2015.
As of 1. July 2017
Coffee: increase of 2-4 euro per kilo in the price of imported coffee, depending on whether raw, roasted or instant. As Greece does not grow coffee the most favorite drink in Greece will skyrocket. Prices for consuming coffee in cafeterias etc are expected to increase by more than 20%.
Cigarettes, e-cigarettes, tobacco: special consumption fee: estimations speak of 30-50 cents per package, 26-30 cents per 20gr tobaccos and 10 cents per ml of the liquid.
Phone land lines: additional fee of 5% on the landline phone bills before the VAT, when accession to internet and/or voice mail.
I suppose as the prices before the VAT will increase the end bill will be much higher than just +5% or 10%.
As of 1. January 2018:
Hotels & Rooms To Let: A special fee will be added on accommodation bills according to the “stars” of the facility. For 1- & 2-star hotels a charge of 0.50 euro, for 3-star hotels, a charge of 1,5 euro will be implemented per room and accommodation. 4-star hotels the fee will be 3 euro and 4 euro for 5-star hotels.
Rooms to Let: category “1 & 2 Keys” 0.25 euro, for “3-keys” will be charged with 0.50 euro per day and 1 euro for category “4 keys”.
The logical result is that when fuel prices increase, the impact affects all sectors.
I could try to calculate what will be the total cost of the hikes but I think I will be dizzy…
EC vice Valdis Dombrovskis told a Greek newspaper on Saturday that “we did not ask for more taxes” and that this is “the decision of the Greek government.” Sure. Greece’s lenders want mass lay-offs in the public sector and sharp decreases in wages and pensions. Would such measures bring 5,4 billion euro in 2016, 2017 and 2018? I don’t know… but I rather doubt it.
Fact is that SYRIZA made a mess out of the spring 2015 negotiations and even if governments officials admit among themselves today that “the July 2015 agreement was the worst thing we could achieve”, it is you, me, granny, the jobless, and the chronic-ill who keep paying the price – not only for the SYRIZA’s mistakes but also for the mismanagement by PASOK and New Democracy all through the years.
And despite all justified criticism towards the SYRIZA-ANEL government, I hear no constructive proposals for sustainable solutions by the opposition parties, other than “SYRIZA must go”. We are doomed to live with populist politicians. PAH!
BTW: 30%-35% of targeted revenues go normally lost in the dark corridors of tax evasion, tax avoidance, no issuing of receipt etc. This is estimated 8-10 billion euro every year
PS I suppose, I have to recharge this old euro-printing machine at home asap