Value-Added-Tax-nado: Greeks Face Soaring Food & Tourism Costs

Tyler Durden's picture

Via KeepTalkingGreece.com,

More than 40,000 food items are been sold with a poisonous 10% Value Added Tax hike as of today and expect to burden the average Greek household with at least 55 euro per month. Beef, coffee, tea, cocoa, spices, sugar, oils – except olive oil, ice-creams, chocolates, but also condoms and tampons, some articles for people with disabilities, transport, taxi… just pick up an item and name it cost 10% more as of Monday 20th July 2015.

The absurd VAT hikes amid recession and economic crisis come into effect with an express implementation of  Greece’s creditors “prior actions” that the coalition government and three opposition parties voted in favor on last Wednesday. In fact, the VAT hikes from 13% to 23% were supposed to go into effect already on Friday, that is less than 48 hours after the voting. But the Greek Finance Ministry decided to give it a two-day extension to allow the market to adjust.

crazy-cartoon

Especially in food items the VAT hikes cause ridiculous examples as in the past, when the Troika insisting on VAT hikes:

Beef 23% but chicken, pork 13%

1 kilo of minced meat: 13% if consists of 60% pork and 40% of beef. But 23% if it consists of 60% beef & 40% pork.

1 scewer of souvlaki with pork: 13%. But if pepper & tomatoes are added 23% despite the fact that the veggies run on 13%.

The same is valid for burgers of pork and chicken or turkey.

Chicken has 13% but it goes up to 23% if it is stuffed with feta cheese or is sold in form of pre-made schnitzel with breaded crust cover.

Plain past is 13% but stuffed pasta like tortellini is 23%

Bread and bread products: 13% if plain, but 23% if they contain sesame cover, or stuffed with raisins and cheese.

The general VAT idea for food items is: 13% for staple food: fruits, vegetables, flours, olive oil, dairy products (milk, yoghurt), salt, fish, bread, water. But 23% for mainly imported goods like beef, and food processed products.

Other VAT hikes to 23% include:

transport tickets (as of autumn 2015) and taxi (as of July 20th), restaurants, foreign language schools.

Minimum taxi fare charge is as of today: €3.44 from €3.20 until yesterday Sunday. Taxi fares from and to Airports will rise accordingly.

Hotel accommodation to rise from 6.5% to 13% as of October 2015.

The 30% taxation reduction for the islands will be scrapped as of autumn, but there will be a new taxation scheme for certain islands categories whether with high tourism or not.

VAT at 13% remains also for utility bills and fuel.

VAT for medicines and vaccines, newspapers, books and theater tickets is now lower from 6.5% down to 6%

The total annual extra burden for the households is expected to be 650 million euro.

Conclusion:

Has Greece now achieved the much praised competitiveness with the VAT hikes? Of course, not.

 

First of all, the VAT hikes have a pure revenues increasing target. They will hit the poor as indirect taxes increase is an unjust measure. The 55 euro more that they will be called to pay each and every month is money they simply do not have.

 

And second, the hikes in restaurants and hotel accommodation will exterminate Greece’s competitiveness in tourism. I suppose, certain tourism companies were sour to see tourists flocking to Greece like crazy last year, while they were deleting other destinations around the Mediterranean basin.

*  *  *

P.S. Thank God, they did not decide to impose the V.A.T. hikes retroactive and ask us to go back to the supermarkets and pay additional 10% for the one package of tortellini we bought in March, coffee & tea and several kilos of sugar since beginning of the year. 

VAT hikes in detail are here (in Greek)

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JustObserving's picture
Greeks Face Soaring Food & Tourism Costs

Please - a billion and half people survive on less than $1.25 a day.  Save your tears, if any, for them.  The only good news is that the Nobel Prize Winner is likely to drone them out of their misery using a $70,000 Hellfire missile:

One and a half billion people live on less than $1.25 per day By Zaida Green 
17 April 2015

 

A new study by the UK’s Overseas Development Institute (ODI) reports that the number of people globally living on less than $1.25 per day is likely to be far higher than the already staggering 1.2 billion estimated by the World Bank.

“There could be as many as a quarter more people living on less than $1.25 a day than current estimates suggest, because they have been missed out of surveys,” the report notes, suggesting that the total number of people living in extreme poverty could be undercounted by as much as 350 million.

https://www.wsws.org/en/articles/2015/04/17/pove-a17.html

 

A Reaper drone costs $28 million; one Hellfire missile (Lockheed Martin/Raytheon) costs about $70,000; one Paveway bomb (Lockheed Martin/Raytheon) about $20,000. The total cost of one weapons load for a Reaper – four Hellfire/ two Paveway – is at least $320,000, a third of a million dollars.

disabledvet's picture

This is literally an "inflation tax"

So the Government prints the money...by then they hit you with a tax "for the privelege of being able to print with impunity."

This all sounds like great news for the Black Market to me...but we'll see.

Certainly not a driver of growth going forward but hey, the "the Banks are open."

TBT or not TBT's picture

A bloated public sector, unionized, unfireable and self serving, will bankrupt you every time.   How does it end?  With obscene taxes on basics, capital controls, and bail ins.  

 Let's massacre the public sector union machines now, to avoid becoming greece(and prevent the election of more Obamas)

Creepy A. Cracker's picture

Whoa...  A LOT of gubmint union people slacking off, rating the ZH comments today.

TeethVillage88s's picture

"A Reaper drone costs $28 million; one Hellfire missile (Lockheed Martin/Raytheon) costs about $70,000; one Paveway bomb (Lockheed Martin/Raytheon) about $20,000."

Jeeez. What a rip off!!

Where the hell are the Military IGs, and Auditors, and GAO.

9-11 was just another Coup for the MIC.

And they continue to win over new young military men and women as well as Congress.

- Sort of tells you the LOW Quality of people we have in Govt, in Congress, and the Military

Total—Department of Defense—Military Outlays 2013 = $609.4 Billion (Down from $650 B)
Total—Department of Defense—Military Outlays 2000 = $283 Billion

- Greece will have to have Armed Guards at the Department stores if it will survive
- Plus EU will assume power to enforce taxes and austerity

JustObserving's picture

While everyone knows that the defense budget is large, national security spending is much larger, nearly double the amount U.S. citizens are told.

http://www.theatlantic.com/politics/archive/2012/02/the-real-defense-bud...

Creepy A. Cracker's picture

The wealth transfer to the non-productive class is more than triple the defense budget.

101 years and counting's picture

increase in cost of food is a great way to force people to stop eating so much.  we need that here in the US.  

Creepy A. Cracker's picture

"Does this make my butt look fat?"

NEVER honestly answer that question.

1000yrdstare's picture

Whats the problem? just borrow more!  HAHAHAHAHAHA!!!

TBT or not TBT's picture

The greater food prices are, the more fattening the foods cash strapped consumers will buy:  

The very worst off end up mainly living mainly off of grain, the cheapest possible food, which has a glycemic index a lot higher than a calorie equivalent dose of table sugar.    Look it up.   Wheat and rice and such are blood sugar bombs.  But cheap cheap cheap.   

Cacete de Ouro's picture

The black economy and informal food markets will surge on this change. Net result - far less VAT collected.

FreeMoney's picture

The Germans are forcing the Greeks to balance their fiscal deficit.  There is no question that increased taxes will promote black market activity and supress legal markets.  There is also no question that slashing government spending will also chop GDP.  But seriously, how can you keep buying ten pounds of shit with only five pounds?

 

It should be obvious that there is no good reason for government to spend if they are unwilling to tax for it right now.  The Keynesian model of borrow to spend right now is the path to debt slavery.

Sam Spade's picture

The Germans were trying to force Greece out of the Euro currency by holding firm to a suicidal deal (and also offering humanitarian aid if the Greeks left).  The Greeks didn’t have the balls to leave, and instead chose to be debt slaves.  Hard to feel sorry for them now…

tsuki's picture

The "humanitarian" aide would have come in Schaüble's troops front running the new Drachma and destroying Greece.  Gotta have that object lesson if the Fouth Reich is to be reborn. 

J Jason Djfmam's picture

Can we please from now on refer to the black economy as the "FREE" economy?

As in "Free of interference" market.

 

 

SumTing Wong's picture

And it is properly called the ""grey economy" or underground economy. There is nothing illicit in what people are buying. The black market is for illegal drugs, prostitution, etc. The grey market is when I buy at your yard sale, or when I make a deal to pay you cash when you do some work for me...

And I'm all about the grey economy. I'm a little ambivalent on the black market.

DaveA's picture

Gray markets become black markets when government declares them illegal. E.g. in Italy it's illegal to rent a pizza oven and bake pizzas for your friends, because you avoid too much VAT that way.

You may call illegal pizzas "gray" and illegal drugs "black" if you like, but only the government gets to enforce its opinion.

semperfi's picture

socialism sucks afterall - who woulda thunk ?

roadhazard's picture

... and supersize my value added tax.

Thisisbullishright's picture

What''s the tax rate for 60% skewered assholes and 40% fucked over??

 

100% ??

 

B2u's picture

Did they increase the tax for the overweight flyers?  Last time I checked I pay extra for luggage even though my weight includling my luggage is less than most of the fat asses that fly today.

Mrmojorisin515's picture

"socialism sucks afterall - who woulda thunk"

 

Dont confuse words, in theory socialism is supposed to help the entire society.  What is going on in greece is the corrupt elites who fermented the current situation getting off scot free while the burden in heaped on the entire populace.  This seems to be the template for the world since 2008.

andybee33's picture

I'm sorry but I've just had enough.  I've been rooting for these guys for months.  However, after this last week, F**k Greece.  Just f**k them.  I hope they all starve.  W**kers.  It's like watching a beaten woman going back from the shelter to her abuser to be put back on the game.  After a while you start to think she must actually like it that way.

q99x2's picture

If they live in Greece why would they want to be a tourist there?

williambanzai7's picture

I am sure many Greeks are now feeling like tourists in their own country.

J Jason Djfmam's picture

The Greeks should add a 50% tax to transactions made with German tourists because Fuck'em.

Spungo's picture

w00t inflation. Prices go up but wages stay flat. 

Bill of Rights's picture

You mean like here in the US, I guess the price of Eggs and fruit ( that no one eats ) is unnoticeable.

 

http://3.bp.blogspot.com/-01s45XOEs5s/VaiRnbh7foI/AAAAAAAAahk/IHgEmAmEkK...

Byte Me's picture

Every person in Belgium would be dancing in the streets if anything had the POISONOUS rate of 13% on it.

Mostly we get schtuck with 21% and shrug it off. Luxuries get a whopping 33%. Electricity 6% (like food did eons ago)

-----------------

Governments hike VAT (BTW, TVA) as needs "arise". It's a screw job for funding purposes. Alternatives for the marks are REVOLUTION. Maybe Greece will revolt - probably not.

Before you downvote, look at the last VAT rises in Britain and see which partties were the perpetrators of raising VAT to a (uniform) 15% (from a split 8%/12 1/2%) or from 15 to 17.5%, or from 17.5% to 20%.

They all do it -- and do it in economic downturns, because they can.

Sure, it's insane. Look who gets tax breaks:

QQQBall's picture

You would think they would want to increase tourism? s/

Bemused Observer's picture

The goal was to increase revenue so Greece can pay its debt? By hitting the one industry they actually make some money at?

Here's my prediction, for what it's worth...A year from now, it will be discovered that Greece's tax collections have actually gone DOWN. Everyone will wring their hands and ask how this is possible, and claim that people must be cheating.

Which will be true. It will also be impossible to do anything about it, as the well-known Greek aversion to paying taxes goes into hyperdrive. These folks have a lot of experience dodging taxes...the only way to alter that would have been to appeal to some kind of national unity. Of course THAT option was swept off the table with the Tsipras capitulation.

The economic Balkanization of Europe will have much the same negative impact as political Balkanization did.

Government needs you to pay taxes's picture

I agree, and tourism will also decline, as the tourists will be the only people who pay the new tax!

CuttingEdge's picture

Most of the tourists are German.

What's the problem?

 

 

TeethVillage88s's picture

They should have got the people from the WB & IMF to work up the terms of these loans and bailouts they would have benefited greatly and never had this huge mess since the WB & IMF have so much experience over the last 40 years in this large area of sub-prime loans.

Wait... South America is very unhappy with the IMF & WB and it was the IMF that handled the Greece World Record Bail out and Debt Restructuring.

So... IMF is a complete failure and doesn't know what it has been doing.

- Trust us, We are the IMF with expertise available to us from the WB, OECD, EU, and the BIS

- Trust us, we are the Troika and we are your Patriarchs

YHC-FTSE's picture

Tourism is like getting free money - charging people to travel to your country, spend money and bugger off. It accounts for 18% of Greek GDP and directly employs ~900,000 people. With 23% VAT hike, they can say goodbye to tourists forever. You really can't make this shit up.

TeethVillage88s's picture

Since Greece won't be able to enforce austerity and pension cuts and all the tax enforcement... EU will step in to help them.

EU will have to send in Outsourced Foreign Workers as Stormtroopers to enter homes and shops and businesses to look at book-keeping, swimming pools, furniture, renovations, and and collect Taxes.

I heard that Haitians, Dominicans, Latin Americans, and others are glad to take the tough jobs under Free Trade and Globalization.

- Wealthy Germans Forced Pensions of Poor Greeks Down to $94 monthly (7/19/2015)

tsuki's picture

Or maybe part of the 80,000 Syrian and North African refugees it created that it expects Greece to house and feed. 

tsuki's picture

That's the Troika's plan.  It is too bad the Troika was not around in 1953.

Panic Mode's picture

These politicians are next to single cell organisms. More tax means less people buying, means less revenue, means less demand, means less jobs, means more unemployment, means less tax income, means unable to service the debts, means more resentment to the EU.

On the other hand, humans will find a way to survive. They will get find or create a black market to buy the basic needs without paying the added tax.

J Jason Djfmam's picture

More tax means nothing to Greeks who are not paying the taxes anyway.

0 x 75% of 0 = You guessed it. 0

tsuki's picture

Please stop talking sense, you'll confuse the political/banking class. 

Madcow's picture

A man is drowning in a pool.  How can you help him?

A. Throw him a life preserver

B. Jump in and pull him to safety.

C. Put ankle weights around him and start trowing rocks at his head

++

If you work for Gov-Co, you know that the correct answer is C.

Government needs you to pay taxes's picture

Add a few inches of water-depth to the pool.  That'll fix it!