Sun, Jun 28, 2015 - Page 9 News List

Greece’s VAT proposal leaves its islanders feeling deserted

SYRIZA’s surprise plan to axe a lower tax rate for Greeks living far from the mainland has raised fears of a ‘tragic’ cost of living effect and a blow to tourism

By Angelique Chrisafis  /  The Guardian, RHODES, Greece

Just outside the medieval walled splendor of Rhodes’ old town, tourists and locals sip iced coffees at the pavement tables of the Gran Caffe restaurant and bar. Its Greek owner, islander Seltsouk Atakli, is laughing and joking with customers.

“Keep smiling is what I always say, but sometimes a smile is not enough,” he shrugs.

As the latest proposed deal to avoid Greece’s bankruptcy threatens to unravel, a row is raging on Rhodes and several other Greek islands over fears that they are being unfairly targeted. To the surprise of locals, one of the government’s proposals to its creditors is to get rid of the special lower value added tax (VAT) rate that applies to a number of Greece’s far-flung islands — not just the famous tourist destinations of Mykonos and Santorini, but scores of little-known smaller islands with aging and depleting populations.

Greece has thousands of islands scattered over a vast area, fewer than 250 of which are populated. Some of those furthest from the mainland have long depended on a special VAT rate 30 percent lower than elsewhere, which offsets the the high cost of having to ship basic everyday goods long distances.

Rhodes, Greece’s fourth-largest island, is a case in point, along with all the other Dodecanese islands scattered at the nation’s furthest southeastern point between Crete and Turkey.

Sunbathers on Rhodes can contemplate the nearby Turkish coast from their loungers, while Athens is more than 230 nautical miles (426km) away.

Everything from milk to medicines has to be transported.

Many other nations have similar reduced VAT schemes to support isolated territories, such as Spain’s concessions to the Canary Islands. Indeed, for years the special rate for far-flung Greek islands was considered untouchable.

In January’s Greek election , the radical SYRIZA party topped the poll in Rhodes, where islanders believed the special lower VAT rate was protected. A party spokesman this week acknowledged that scrapping the special VAT rate would have a repercussion on island residents. SYRIZA’s coalition partner, the right-wing Independent Greeks Party — keen to court voters on islands — has vowed this week to oppose any abolition of the special island rate “even if the government falls.”

In his restaurant, Atakli said: “At least 90 percent of my supplies have to be brought in from the mainland. Vegetables are grown here, but all milk, cheese — even olive oil — has to be shipped very far, it’s expensive. I’ll have no choice but to absorb this VAT rise myself. I’m not going to put up prices in the restaurant. It’s more important for me to keep my customers. I’ll take a cut on profits.”

However, profits are already down after years of crisis. He has cut staff, negotiated staggered payments for his many unpaid bills and is spending less on his family, clothes and supermarket shop. His restaurant, which has been going for 25 years, once flourished.

“That seems like a fairy tale now,” he said.

The VAT issue is about more than economics — it is about keeping Greece’s islands populated.

Atakli, a proud islander from a Muslim family going back generations on Rhodes, is a symbol of its centuries-old multiculturalism. Islanders across Greece are crucial to the nation’s rich cultural identity. With many of the poorer and smaller islands losing services, jobs and seeing their younger generations leave for the mainland, there are fears that their populations will gradually decline, leaving ghost villages and tourist ghettos.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top