EUROZONE-GREECE/SANTORINI TAX Business owners on Greek tourist island angered by government proposals on tax

Record ID: 147766

  • Title: EUROZONE-GREECE/SANTORINI TAX Business owners on Greek tourist island angered by government proposals on tax
  • Date: 10th July 2015
  • Summary: FIRA, SANTORINI ISLAND, GREECE (JULY 10, 2015) (REUTERS) FIRA CITY / AEGEAN SEA DOME OF CHURCH AEGEAN SEA
  • Embargoed: 25th July 2015 13:00
  • Keywords:
  • Location: Greece
  • Country: Greece
  • Topics: General
  • Reuters ID: LVA32QLULH9MPEAEEDMZ2TI04RLV
  • Aspect Ratio: 16:9
  • Story Text: The Greek tourist island of Santorini is one of the most iconic spots for visitors to the country. Popular with foreigners because of its vast scenic views over the Aegean Sea, the island has a buzzing tourism industry.
    But on Friday (July 10), local business owners expressed their worry and anger at the latest proposals made by the Greek government to try and secure a third aid package from international lenders.
    Greece's leftist Prime Minister Alexis Tsipras on Thursday (July 9) sent creditors his latest proposal offering new measures including a value added tax hike on restaurants and hotels and scrapping tax breaks for its islands in exchange for a cash-for-reforms deal, as Athens races to win new funds to avert bankruptcy.
    As part of the deal, which is still to be debated in parliament and passed by Greek MPs, VAT would be increased for restaurants and hotels by 23 and 13 percent respectively.
    The tax breaks would end for the islands with higher incomes and those which are most popular tourist destinations, including Santorini.
    Fany Christou manages the "Taverna Tsipoouradiko" restaurant in Santorini's main town of Fira. She has been enraged by the latest proposals from the government in Athens.
    "Why must I pay so much taxes and all that are leaving here and working here? Why they don't pay all the rich people? They must pay. I don't know that. But it's the easy way for the government, for all of us. Ok, what we doing, ok, we go to 23% and they are paying. But it's not the thing, they must have the money from the people that have the money, and not from us," Christou told Reuters.
    Asked if higher taxes would mean fewer visitors to the island, she said, "Yes, of course, if everything is expensive. So it's not good for us."
    The cost of living in Santorini is already higher than the mainland, because supplies of all kinds have to be shipped by boat.
    Because of this, the Greek islands have been benefiting from tax breaks to try and protect the country's vital tourist industry.
    But one local business owner said an end to the tax breaks would be detrimental to life on the island.
    "Without the discount, all prices are going to increase, not only the restaurants, but food in supermarkets, medicines, gas, hotels, everything," said Lucas Pelicanos, the owner of the restaurant "The Garden".
    He added that in the case of the proposals going through, he would have to increase the prices in his menu.
    He feels the government should be doing more to help the island tourist industry and not punish those who have kept it strong.
    "They want to do it maybe in Mykonos and Santorini. Because we have success in tourism, somebody wants to punish us because we do it properly or we have, we have a success. Nowhere else in the world they punish the success," said Pelicanos, who is also the owner of two hotels on the island, which he says has seen an increase in cancellations for August.
    Alexandra, a supporter of Tsipras, works in a clothes shop in Fira.
    She warned that an increase in taxes on the island would make Santorini a less attractive place for tourists, meaning it would lose out to other, perhaps cheaper, destinations.
    "The 23 VAT tax in the islands will not be competitive to Turkey, to Italy, to Spain, to other touristic areas and islands that have 10% VAT tax," Alexandra said.
    Behind his desk at the Hotel Santorini, the receptionist is also worrying about the prospect of increased taxes.
    "Another big problem, and big issue, is that we are now 10th of July today. It's a period that the majority of tour operators want to do their contracts for the next summer, for the summer of 2016, and we cannot do that because we don't know the VAT," Costas Argylos explained.
    "In a way I feel betrayed because they put all those measures in the country in a period that was the peak of the season, and there is no reason. I think they could have done that before, or just to discuss the same proposals that they are discussing now," he added.
    EU leaders are expected to discuss the proposals at a full summit in Brussels on Sunday (July 12), where a final agreement could be made after months of negotiations.
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