(Greece) – The newest round of tax increases were implementing on Wednesday, June 1 as the Greek government complies with austerity measures that were required to secure the newest round of bailout funds. This round of tax hikes directly influences one of the things that is at the center of the Greek culture – its cafes. The tax increases impact coffee and beer prices, two things that are prevalent in these Greek cafes. On Wednesday, the sales tax rate, also known as the value added tax, or VAT, went up from 23% to 24%. Tax increases were also imposted on services such as internet, telephone, and paid television subscription. These are items that people have cut back on naturally due to the financial crisis.
The Greek Parliament approved these tax increases shortly before the Eurogroup leaders met to discuss whether or not Greece qualified for additional bailout funds. International creditors had said that agreeing to implement these austerity measures is a requirement before the lenders were willing to release the newest wave of bailout funds totaling 10.3 Billion Euros. Greece needs this money to help make its loan payments. The government is hoping this will help them enter into discussions that will ultimately help ease Athens’ debt repayments. As part of the bailout agreement, the Greek government agreed to make changes to pensions, increase taxes, and meet certain budget targets.
These moves were met with controversy but the government feels they are necessary to get the economy back on track. Business owners in particular have criticized the tax hikes saying that it will reduce the amount of goods purchased, which will sink the economy down even further. Many of these businesses have been struggling since the economic crisis first hit in 2010. The economy has shrunk considerably and unemployment rates are high at around 24%. They believe that tax increases will only make the situation worse. The Greek economy relies on tourism, and there are those who fear these tax increases could negatively impact that.