Greeks predict ‘kiss of death’ tax will cripple tourist industry

Published by The Mail on Sunday (19th July, 2015)

Greece’s former finance minister has warned that the austerity programme imposed by Europe will be the ‘greatest disaster ever’ as fears grow over the future of the country’s all-important tourism industry.

Bookings have plummeted in recent weeks, with tourists put off by bank closures and the threat of Greece leaving the euro. British firms are slashing prices of holidays by up to 70 per cent.

Now tax rises coming in tomorrow have provoked fears that thousands of restaurants and cafes could close, with one leading figure in the sector calling them the ‘kiss of death’.

Yanis Varoufakis, the finance minister who resigned earlier this month, yesterday condemned the £60billion bailout, saying the austerity programme will ‘go down in history as the greatest disaster of macroeconomic management ever’.

His savage criticism came as prime minister Alexis Tsipras reshuffled his cabinet to weed out ministers who were among 39 rebels in his Syriza party voting against the reform package in parliament last week.

Mr Tsipras also told banks to reopen tomorrow, with withdrawal limits for locals lifted from €60 a day to €420 a week. The European Central Bank is releasing €900 million (£625 million) in emergency credit next week to the stricken banking sector as part of the country’s third bailout.

Yet the latest dose of austerity could clobber the £8.5billion tourist industry, although it is almost the only thriving sector of the economy and employs one in five Greek adults. Last year there were a record 24 million visitors, with numbers expected to rise again in 2015.

But Xenophon Petropoulos of the Greek Tourism Confederation said last-minute bookings – which comprise one-fifth of holidays – were down by a quarter over recent weeks. Tomorrow sees a rise in VAT on food, transport and restaurant meals from 13 per cent to 23 per cent, with a similar rise for hotels in October.

‘We know the tourist industry must help kick-start the Greek economy but this is a big burden for us,’ said Mr Petropoulos. The tax rises were described as ‘a kiss of death’ by Thanassis Papanikolaou, head of the SEPOA association of restaurant chains.

A previous increase in VAT four years ago led to the closure of 4,500 bars, cafes and tavernas and the loss of 40,000 jobs in a country already crippled by unemployment.

Georgia Papadopoulou, 50, fears tax rises could force the closure of the celebrated Botsaris fish restaurant founded by her grandfather six decades ago and the oldest in Mikrolimano, the traditional harbour in the port of Pireaus.

‘This may finish us,’ she said. ‘We feel completely trapped. There is nothing left in Greece except for tourism, and now this. Our country is dead. I only hope no other country goes through what we are going through.’

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