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Food prices to drop after VAT cut

- by Archimedes

Food prices to drop after VAT cut.

Holidaymakers in Greece should see menu prices drop in Greek holiday tavernas after a cut in taxes for restaurants, bars and cafes. The Greek government announced VAT rates imposed for food sold in restaurants and hotel is to be cut to 13%. The Association of Greek Tourism Enterprises (SETE) has welcomed the move which comes into force on August 1.

SETE president Andreas Andreadis said: "It is an essential development measure that will shrink unemployment, bolster tourism and the Greek economy."

Greek tavernas have been hard hit by rising VAT rates on food, making meals out much more expensive. Things were made worse as hotel restaurant were exempt from the charges.

The VAT rate on food catering services in restaurants, cafes, canteens saw a 77% increase in September last year – up from 13% to 23%.

The Greek Government received criticism from restaurant owners and tourism professionals when it announced a VAT hike on food catering services.

Taverna owners claimed the high taxes had hit the Greek tourism industry by as much as 30% as menu prices soared and holidaymakers turned to all-inclusive deals.

According to reports, the latest measure will most likely be temporary and implemented for four to six months until it becomes clear whether the VAT cut will show results or not.

The effects of the measure will be monitored and if tax revenues go up from increased sales then the reduced rate will become permanent.

The Hellenic Chamber of Hotels congratulated the Greek Government but Greek Tourism Minister Olga Kefalogianni has stressed the need for the VAT reduction to reach customers and strengthen the competitiveness of Greek tourism if it is to stay permanent.