ATHENS: Greece ceased VAT privileges on 27 of its islands. Previously, they enjoyed VAT rates that were 3% lower than on the mainland. Now VAT there will rise from 5%, 9% and 17% to 6%, 13% and 24% respectively for different types of goods and services.
According to news portal Greek Travel Pages, the VAT hike will cause prices for medicines, books and magazines to increase by 1.5% on average. Prices for essential foods (fish, milk, fruits, vegetables and olive oil) will grow by about 4% while prices for petrol, cigarettes, alcohol and clothing will grow by 6%. At the same time, the Greek Finance Ministry promised to partially compensate islanders’ for their losses by revising transportation charges.
This is only one of 12 measures that the government plans to take in 2018. Others include investments in social security, the introduction of a new tourist tax, reducing heating benefits and increasing a number of other taxes. According to the government’s estimates, these measures will bolster its budget by about €1 billion.
The combination of initiatives to reduce public debt and the country’s budget deficit is already bearing fruit IMF experts forecast a 1.8% increase in Greece’s GDP in 2017 and 2.6% in 2018.
