Putting a determined face on financial recovery, Greece has brought higher V-A-T rates into force.
The increase in value added tax will impact on prices of a range of products and services considered vital.
The measure aimed at reducing the massive national debt is expected to generate additional budget revenues of 1.3 billion euros or 0.5 percent of GDP — on, for instance, food, with a further 1.1 billion euro boost from increased taxes on transport fuel.
Ordinary Greeks appear deeply worried about this year’s 16 billion euro austerity plan. An elderly man in a supermarket said: “For a person who lives on a pension… We were affected before the tax went up, now everything has gone up and we’re worse off.”
A grandmother getting her groceries said: “Of course it will influence the way I shop, though probably not for food, because that’s only a one percent hike, but for other products.”
Uncertainty over possible knock-on effects is widespread, said Constantine Mihalos, with the Chamber of Commerce in Athens: “Small and medium sized enterprise in Greece hasn’t got the luxury of further reducing prices. During the last two years, when this crisis broke out on a global level, we have got to the point where profit-making, as far as the Greek SME is concerned is non-existent.”
Some large businesses have said they would raise their prices very little or not at all, or absorb the increased taxes into their costs in an attempt to ease the burden on consumers.