Greek VAT rise debate

A potential Greek Value Added Tax increase is being discussed between the government and International Monetary Fund. The rise is seen by the IMF as one of the key reforms required for Greece to reach its tough Euro currency bail out terms.

Greece is due to make a €14bn repayment to the IMF this week. There have been doubts about Greece’s ability to meet this repayment, threatening a default which could potential lead to Greece exiting the Euro currency programme.

Any VAT rise could come in a number of ways:

1. An increase in the basic foodstuffs reduced VAT rate from the current 13%
2. Removal of the reduced VAT rates for some Greek islands
3. A reclassification of the tourism from the 13% reduced rate to the standard rate of 23%.

The reduced Greek tourism rate was introduced in 2013. The reduction to boost Greece’s crucial tourism trade was granted with the consent of the Troika of the IMF, European Central Bank and European Commission, which oversee the bail out terms.