Post by Oz-T on May 8, 2015 5:03:48 GMT
Just when you think that the Greeks had just about exhausted their creative measures to wreck their own economy, they've just come up with a new idea: slap an 18% tax on hotels and restaurant bills to siphon plenty of euros from the pockets of any tourists entering their country.
Now, we all know that Greece is bankrupt, entirely due to their own laziness, incompetence and falsification of their true financial situation. We also know that the German taxpayers have been propping up Greece in a big way, to prevent a widespread collapse - and part of the deal is for Greece to tighten its belt and balance its books. It's made some progress with this over the past years but its new socialist government thinks it's done enough of the painful austerity and is trying to play bluff with billions of euros of debt that are reaching maturity at the moment.
You may recall that Greece kept on borrowing to pay for many things they couldn't afford, including public service pensions that allow retirement when a government employee reaches their early fifties. The European Central bank would like Greece to cut back on paying these sorts of pensions but the new Greek government has other ideas.
To please the bankers in Brussels, Greece plans to increase its VAT to one uniform rate: 18%. This will hit those goods and services that were taxed at lower rates, such as hotels (6.5%) and restaurant bills (13%). So any of us planning a trip to Greece will need to either budget for higher costs, or choose a different destination. The head of the Greek tourism association is in no doubt about what will happen - he thinks it'll scare tourists away to other holiday places: “You don’t kill the only cow that’s generating milk for you”.
Hotel and restaurant owners in Italy, France, Portugal and Spain will be celebrating over this decision. Meanwhile, Greek businesses will disproportionately bear the brunt of this tax. It won't raise more money for Greece if tourists take their money elsewhere.
It is inevitable that the delayed crunch will one day arrive for Greece and Europe. A loan default by Greece will happen, no matter what. The lenders will absolutely have to write off these bad debts, and then nobody will want to lend any more to this country. That will leave Greece as a devastated financial ruin, and the only way back will be a slow one, starting with a catastrophic jolt - Greece will have to exit the Eurozone and get its own currency. That's a shock that will reverberate around the entire world.
Now, we all know that Greece is bankrupt, entirely due to their own laziness, incompetence and falsification of their true financial situation. We also know that the German taxpayers have been propping up Greece in a big way, to prevent a widespread collapse - and part of the deal is for Greece to tighten its belt and balance its books. It's made some progress with this over the past years but its new socialist government thinks it's done enough of the painful austerity and is trying to play bluff with billions of euros of debt that are reaching maturity at the moment.
You may recall that Greece kept on borrowing to pay for many things they couldn't afford, including public service pensions that allow retirement when a government employee reaches their early fifties. The European Central bank would like Greece to cut back on paying these sorts of pensions but the new Greek government has other ideas.
To please the bankers in Brussels, Greece plans to increase its VAT to one uniform rate: 18%. This will hit those goods and services that were taxed at lower rates, such as hotels (6.5%) and restaurant bills (13%). So any of us planning a trip to Greece will need to either budget for higher costs, or choose a different destination. The head of the Greek tourism association is in no doubt about what will happen - he thinks it'll scare tourists away to other holiday places: “You don’t kill the only cow that’s generating milk for you”.
Hotel and restaurant owners in Italy, France, Portugal and Spain will be celebrating over this decision. Meanwhile, Greek businesses will disproportionately bear the brunt of this tax. It won't raise more money for Greece if tourists take their money elsewhere.
It is inevitable that the delayed crunch will one day arrive for Greece and Europe. A loan default by Greece will happen, no matter what. The lenders will absolutely have to write off these bad debts, and then nobody will want to lend any more to this country. That will leave Greece as a devastated financial ruin, and the only way back will be a slow one, starting with a catastrophic jolt - Greece will have to exit the Eurozone and get its own currency. That's a shock that will reverberate around the entire world.
