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Greek holidays set to stay cheap

- by Andy Cornish

Greek Island holidays look set to stay cheaper this year after the new Greek government ruled out a hike in VAT for tourism industries.

Fears were growing among hotel and taverna owners across Greece that they might have to increase their prices in the summer season when rumours emerged that the government might end the favourable low VAT rates on food, drink and hotel rooms.

But the Greek government has assured tourism leaders that it will not raise the VAT on tourism and staple goods when asked about a possible tax rise in questions to the Greek parliament.

A spokesman for the finance department said: "The government does not intend to raise VAT in economic activities such as tourism or staple goods such as food and medicine."

The news will bring a sigh of relief from Greek hotel owners who have already signed seasonal deals with the major European tour operators on the basis of current tax rates.

It means they will be able to keep hotel room prices low for another holiday season. Holiday bar and taverna owners have also been hoping to keep restaurant prices down this year as they bid to attract a record number of tourists to Greek holiday beaches.

It was thought that plans were in the pipeline to double the VAT tax rates on hotel rooms as Greece tries desperately to pay off its international debts.

Plans drawn up by the previous Greek government to raise taxes were thought to be taken up by the new left-wing government elected in January.

The possibility triggered protest from the Greek Islands tourism sector. The head of the influential Association of Greek Tourism Enterprises (SETE), Andreas Andreadis, has dubbed the VAT increase "suicidal".

Hotels in Greece currently pay just 6.5% VAT compared to average levels of 13% across Greece. The low VAT rate was supposed to stimulate tourism by helping Greeks to keep holiday prices low.

The move certainly paid off with Greece enjoying record tourist arrivals for the three years running and more than 21.5 million holiday visitors in 2014.

Not everyone is in favour of low tax rates for hotels. The head of the National Confederation of Hellenic Commerce, Vassilis Korkidis, wanted the government to "right the wrong" of halving VAT rates for hotels.

But the decision will be welcomed by Greek island holiday visitors who are already enjoying good rates of exchange against the euro and a wealth of cheap holiday offers to Greece.

Ryanair launched its Athens summer 2015 schedule this month with new flights to the Greek capital of Athens from several European cities and also to the hugely popular island of Santorini.

The airline's Athens summer 2015 schedule will also include increased frequency on routes to Thessaloniki, London Stansted, Rhodes and Chania on Crete.

Passenger traffic through Athens International Airport also exceeded one million in March for the first time since 2010, rising 24.5%, airport authorities have revealed.

According to latest figures, international flight passengers to Athens rose 20% on march last year and domestic flight passengers went up by 33%.

Foreign visitors citing Athens as their sole destination rose by an impressive 29% while airport passenger traffic for the first quarter of 2015 is up more than 25% overall at nearly three million passengers.

There has been a steady rise in the number of flights operated from Athens airport in the first three months of 2015, up 17% on the same period last year.