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What Does Greek Tourism Stand to Lose?

Greece mapNegotiations between Greece and its international lenders are at a standstill and the tourism sector is on the edge waiting to see which measures will affect its future.

According to media reports, measures directly or indirectly impacting Greek tourism include Greece accepting a primary surplus of 1 percent for 2015 and hefty hikes in value added tax (VAT), which is expected to bring in revenue of about 1.4 billion euros.

As far as tourism and transport are concerned, the Greek government is said to have agreed to liberate holiday home rates by limiting the leasing period to a minimum of 30 days.

Additionally, Greece appears to have also agreed to setting standards for online booking of holiday homes in order to encourage healthy competition and ensure tax revenue.

The government has also committed to amending the legislative framework to allow the transfer via public-use coaches of tourist groups, and plans to restructure the Civil Aviation Authority in accordance with EU law.

Regarding the hotly debated VAT rate issue, the government appears to have accepted the creditors’ demand to axe a 30 percent VAT discount applicable to the Aegean islands, among them Mykonos and Santorini, but it is still unclear if this will take effect in October or even earlier. The decision is expected to bring in some 350 million euros, which the government plans to use to subsidize remote islands lacking transportation or other infrastructure. The government does not plan to return a portion of the increased VAT to island inhabitants.

On a final note, Greece’s international lenders have proposed a broadening of the tax base with a standard rate of 23 percent in tourism.

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