Rise in VAT rates in force as of Thursday, second in three and a half months, will push up prices in several broad consumption products. Furthermore, VAT has for the first time introduced to a number of new services such as private clinics, notaries publics, lawyers. Economy sectors fear that new rise in VAT rates will trigger inflation as despite the Confederation of Hellenic Commerce businessmen say they can not absorb the ne rise in VAT as they did in March.
Domino Effect
Second rise in VAT rates will trigger domino effect in a number of products and services, while tough deliberations are being held between industrialists, suppliers and retailers regarding sharing of cost.
The president of merchants Basilis Korkidis has promised that the second rise in VAT will be also absorbed to prevent reduction in consumption.
However, other sectors such as Importers and Representatives said they are unable to absorb the second rise in VAT.
As of July, 1 VAT rates rose from 21% to 23%, low rate from 10% to 11% and the lowest rate from 5% to 5.5%.
VAT 23% includes clothing, shoes, communication services, furniture, household items, new buildings, construction material, cars, motorcycles, fuel, cigarettes, alcoholic drinks, electric appliances, electronics, detergents, school items, car maintenance, hair-dressers', beauty salons.
VAT 11% includes food, medicines, soft drinks, mass transport fares, tickets for cinemas, concerts and generally culture events, electricity, natural gas and water bills, restaurants, coffee shops and pastry shops.
VAT 5.5% includes newspapers, magazines, books and theaters.
Average price for unleaded oil is sold above EUR 1.5 per liter since this morning. Also taxi fares and road tolls went up after the new rise in VAT rates.
"Rise in VAT is not the best measure but it is necessary" told state radio station NET 105.8 the general secretary of the Finance Ministry Dimitris Georgakopoulos and stressed "the market will punish ones who will attempt to "play" at the expense of consumers".
The Finance Minister said structural changes slowly materialized will liberate the market and put an end to fabricated rises in VAT.
All political parties expressed objections to rise in VAT.