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Greek rooms tax plan scrapped

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Cheap rooms for holiday visitors on the Greek islands look set to stay following a government change of heart on new property taxes.

Owners of Greek 'domatia', small homes with rooms to let, were about to get stung for property taxes under Greek austerity measures.

It could have meant holiday visitors to Greece shelling out a lot more for 'domatia' rooms to let throughout Greece and the Greek islands.

But the plan to impose an extra property tax on 'domatia' owners has been scrapped after Greek tourism minister Olga Kefalogianni stepped in to fight the move.

Under a radical review of Greece's arcane property tax laws, owners of houses with rooms let out to Greek island holidaymakers could have been clobbered with a tax on each room as though it were classed as a separate property.

It would have meant a huge hike in taxes and the potential closure of rooms normally let out at cheap rates to Greek island hopping holidaymakers.

Now 'domatia' rooms to let have been excluded from paying the additional property tax after an amendment last week to a tax bill voted through in the Greek parliament last year.

The Greek Unified Property Tax (ENFIA) scheme was introduced as an emergency tax in bid to bring in revenue to state coffers and included the provision to tax rooms to let as though each room were a separate property.

ENFIA has now become an annual ownership tax that comes on top of some 40 property-related taxes already applicable to hotel and apartment owners in Greece.

Hotel owners are already fighting plans to double the VAT tax rate on rooms this year, which chief of the influential Association of Greek Tourism Enterprises (SETE), Andreas Andreadis, has dubbed "suicidal".

A doubling of the current VAT rate to 13% could add an immediate 5% to the price of a hotel room in the Greek islands and leading to even bigger hikes next year.

The extra taxes come at a time when Greece's economic fortunes are looking good after years of austerity, with the tourism sector leading the recovery.

Some support the VAT hike, which would bring hotel owners in line with other Greek industries. The hotel room VAT rate was halved in 2011 to promote tourism.

The low tax rate has certainly helped promote tourism in Greece with holiday arrivals confidently expected to top a record 21 million for 2014.

Domestic travellers have also helped boost Greek tourism figures for 2014, according to figures released recently by the Hellenic Civil Aviation Authority.

Bookings by Greek travellers to domestic destinations rose 40% over the Christmas period. According to the Greek Statistical Service, the changing trend started in 2013, with overnight stays at hotels and camping sites by Greeks rising 5% compared to 3.4% in 2012.

With the summer holiday season about to get under way, Greek hotel and room owners will be keen to stay competitive in the hope of attracting even more holiday visitors this year.

But others argue that as tourism in Greece enjoying such good times it is only reasonable to as hotel owners to pay their fair share towards supporting the economy.

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