Xinhua: As Greeks shoulder new tax burden, market professionals warn of backlash

By Maria Spiliopoulou/

A barrage of new direct and indirect taxes on basic products and services went into effect on Jan. 1 in Greece, adding a further burden to debt-ridden households and enterprises.

As the Greek government heralds the exit from the eight-year recession in 2017, urging patience for the last sacrifices, market professionals warn of a backlash.

Among the long list of fresh tax hikes which kicked in at the beginning of the new year are higher value-added taxes and higher duties on tobacco products and electronic cigarettes (by 20 percent), coffee, fuels (by four to 10 cents per liter), telephone services and cable television (by five percent).

“2017 is the year of bailout reviews and taxes. We face a record of taxes, as the goal is to add 2.5 billion euros (2.65 billion U.S. dollars) in revenues to the existing tax burden,” president of the Hellenic Confederation of Commerce and Entrepreneurship (ESEE) Vassilis Korkidis told Xinhua, presenting the numbers of the latest wave of tax increases.

Korkidis reminded that in the past seven years Greeks were burdened with an extra 37 billion euros in taxes.

Some 440 million euros concern fuels, 162 million euros tobacco products and 65 million euros coffee products.

“Greeks face tangible tax hikes in their everyday life,” he explained, warning that over taxation may eventually reduce revenues for state coffers.

Yorgos Kavathas, head of the Hellenic Confederation of Professionals, Craftsmen & Merchants (GSEVEE), shared Korkidis’s view, pointing to the example of tax increases on fuels.

“The tax hike on fuels will increase the cost of transports. Sooner or later we will see it rolling on the prices of products. It is simple maths.

“Businesses have exceeded their ability to pay taxes and this will affect consumption. As a result, we will witness increases on prices of products and services and, in parallel, lower turnover,” Kavathas said.

Market professionals warn they can no longer absorb tax increases and that finance ministry officials should expect a fresh slump in fuel consumption, and less tax revenues.

Yorgos Asmatoglou, president of the Panhellenic Federation of Fuel Station Owners, is already facing frustrated clients who are paying almost two euros per liter of unleaded gas.

“We see fuels increasing so much that the average Greek consumer… has reached a point when it is very difficult to fill up his car, and even harder to buy heating fuel to warm his home,” Asmatoglou said.

Taxi driver Yannis T. has no choice but to bear the extra cost of five euros per day to fill his car.

“Business is down and fuels have increased so much, we suffer many losses. People are no longer using taxis. You can imagine how much of a burden the extra 5 euros per day is for us,” he said.

Many have turned to car pooling, riding a bicycle, or walking home so as to reduce the transport costs.

Despite the harsh winter conditions this year, the average household purchased only 300 liters of heating oil, down from the 1,000 liters in the pre-crisis years, according to Asmatoglou.

The result of prolonged belt-tightening is businesses closing, more jobless, and fewer revenues for the state, he warned.

In 2008, there were 7,900 gas stations across Greece, while today 5,500 remain, according to Asmatoglou.

Grigoris Armenakos, a second-generation coffee roaster in Athens, fears a drop in sales even for Greeks’ favorite drink, due to the excise tax on imported and domestically-produced coffee, pushing up the price per kilo by two to four euros for roasted coffee beans on average.

“In 2015, coffee cost nine euros per kilo. With the VAT rate increase from 13 to 24 percent last year and now, due to the new special consumption tax, the price has reached 14 euros per kilo,” Armenakos explained.

“I do not believe Greeks will stop drinking coffee, but I am certain consumption will decline,” he said.

For struggling Greeks, drinking coffee with friends is one of the last “luxuries” they have allowed themselves.

Glykeria Partsalis, 86, still chats with her neighbors over a cup of hot coffee. However, she is one of the 1.2 million retirees receiving less than 665 euros per month, which, according to the Hellenic Statistical Authority, means she is living at the poverty line.

She has cut back on spending on heating and at the supermarket and grows vegetables in her garden.

Source: Xinhua