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Greek government implements a rise in VAT with the top rate at 23 percent

Greek government implements a rise in VAT with the top rate at 23 percent
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Shopping became more expensive on Monday due to a hike in VAT.

The tax on most goods and services including processed food has gone up from 13 to 23 percent.

The new rates are part of the requirements set by creditors for the country’s third bailout.

Five years ago the rate was nine percent. Fresh bread will not be affected this time but bakers will be hit with larger bills as ingredients will go up in price.

“We have past experience from raising the VAT on food products – two years ago it went up. Then sales went down and businesses laid off employees,” explained Giannis Manos.

Consumers’ cash in hand has already been stretched by capital controls VAT could now tighten their spending power even more.

“I got 50 euros from the ATM. I have already spent most of it. Now I have 5 euros to last the week. Is that possible?” said one shopper.

The household bills its reckoned will go up around three and a half percent. And it’s not just processed food which will see a rise to 23 percent, clothes and shoes will also hit the family budget.

“Overall the extra burden for households will reach 650 million euros per year. This is just from the increase of VAT on food. This means an average of 157 euros per household. It is money households don’t have,” explained Lefteris Kiosses, researcher at the Institute of Retail Consumer Goods.

Travel will be more expensive with the price of air tickets, bus journeys, and taxi rides all subject to the increase.

“We expect the rise to finish us off, not just lead to a decrease in clients. They were few anyway. This is the final blow. We cannot stand it, people cannot stand it. Do you think it is only the 23 percent for the taxi ride. Two euros here, three there, five they add up in the family budget,” stressed one taxi driver.

The government is aiming to generate two billion euros in revenues from the measure.

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