Greeks Stock Up on Staples Before Tax Increase

Summary

The Greek econ­omy is fac­ing chal­lenges with VAT increases on essen­tial prod­ucts like olive oil, lead­ing to a rush by con­sumers to stock up before the tax hike takes effect. The new taxes are caus­ing con­cern among pro­fes­sion­als in var­i­ous sec­tors, includ­ing fears of a drop in sales to tourists and a poten­tial decrease in over­all con­sump­tion, mak­ing the eco­nomic out­look for 2017 uncer­tain.

The econ­omy in Greece is still stuck on the dif­fi­cult side. With taxes on olive oil ris­ing from 9 per­cent to 13 per­cent tomor­row, many Greeks are rush­ing to buy and stock up on the sta­ple among other prod­ucts. Every hour counts, espe­cially for those in the trade who have boosted their stocks in the past few weeks.

“Some peo­ple are hop­ing to make stocks for six months,” said Giorgos Kourasis, gen­eral sec­re­tary of the Greek Federation of Catering Trades. ​“It is a real tsunami of taxes that are falling on us, in this sev­enth year of reces­sion. Something we have never seen — and pro­fes­sion­als will have to absorb this increase so as not to lose their clients.”

Many sec­tors are affected by the VAT increases, includ­ing tele­phone, cable tele­vi­sion, gaso­line, elec­tronic cig­a­rettes and tobacco. ​“The lat­est increase on cig­a­rettes hap­pened not even eight months ago,” Kourasis said. ​“Greeks are going to buy ille­gally from neigh­bor­ing coun­tries.”

Traders fear a drop in sales to tourists who are keen on Greece’s flag­ship prod­uct. The rush is less vis­i­ble in super­mar­kets, but pro­fes­sion­als fear a drop in the con­sump­tion across the board. This could be the case for cof­fee, which is also con­sub­stan­tial to the Greek life, as it will increase from €2 to €4 per kilo on aver­age.

For Greek peo­ple, the Year 2016 has already been quite hard with higher VAT and new gov­ern­ment taxes apply­ing to basic prod­ucts.

In May 2016, the press was mak­ing jokes on the dras­tic eco­nomic mea­sures: ​“Only the air that we breathe will not be taxed,” a head­line read, after the new pack­age of mea­sures pro­posed to the Greek Parliament on May 23 in exchange for a release of a €5.4 bil­lion loan.

The Greek MEPs adopted the new mea­sures requested by the coun­try’s cred­i­tors as a con­di­tion for unblock­ing the loan. The weak major­ity of the gov­ern­ment, led by Alexis Tsipras, had just passed a very unpop­u­lar 7,000-page bill.

The law included a mech­a­nism for auto­matic cor­rec­tion in the event of fis­cal slip­page and addi­tional mea­sures to accel­er­ate pub­lic com­pa­nies pri­va­ti­za­tion. And the series of mea­sures also included a bar­rage of taxes, one of which tar­geted the hotel indus­try. Various taxes also weighed more on con­sump­tion prod­ucts, includ­ing olive oil.

So the start of 2017 does not look to bring much relief.