The recent discrepancies in foreign travel receipts between the Bank of Greece and the Tourism Ministry are in great part due to tax evasion and reflect the impact of tax policies, according to the Hellenic Federation of Enterprises (SEV) weekly report.
One the one hand, according to central bank figures, Greece saw more than 17.2 million visitors in the first eight months of 2016, up by 1.8 percent, against the same period in 2015, on the other, tax receipts fell to 8.43 million euros against 9.25 million euros last year.
SEV analysts stress that the over taxation of one of the Greek economy’s strongest sectors is leading to tax evasion and refers to the issue of capital controls as another factor affecting the outcome as many tourism entrepreneurs and shipping companies are opting to retain accounts abroad.
The SEV report goes on to add that in order for Greek tourism businesses to remain competitive and maintain demand they most preserve the quality of services offered compared to the price and this can only be achieved by increasing the quality of goods and services. Analysts are again pointing the finger at increased taxation as entrepreneurs are obliged to increase prices not due to improved quality but in order to meet tax demands, which in turn, SEV says, is to the detriment of both economic growth and state coffers.
The report further explains that financial figures for the first eight months of the year appear to be positive due to revenue from the ENFIA property tax in September, which together with VAT revenue and a restriction of cash expenditure led to a primary surplus. This, SEV says, is not the real picture as it fails to take into account public debts to private parties amounting to some 8 billion euros.