An 'Island Tax' Could Harm One Bright Spot In Greek Economy : Parallels The new bailout plan for Greece calls for a steep sales-tax increase on the Aegean Islands, raising fears it could harm tourism, one of the few sectors that's been doing well.
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An 'Island Tax' Could Harm One Bright Spot In Greek Economy

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An 'Island Tax' Could Harm One Bright Spot In Greek Economy

An 'Island Tax' Could Harm One Bright Spot In Greek Economy

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  • <iframe src="https://www.npr.org/player/embed/429340930/429597217" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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DAVID GREENE, HOST:

If there's been one bright spot in Greece's troubled economy, it's been tourism. The Greek islands are seeing record numbers of visitors this summer. For years, hotels, shops and restaurants on far-flung Greek islands kept costs low thanks to a big tax break. But now the country's creditors are demanding they pay higher taxes. Joanna Kakissis traveled to the Greek island of Lemnos.

UNIDENTIFIED WOMAN: Welcome Porto Myrina Palace.

JOANNA KAKISSIS, BYLINE: About a hundred very fit British tourists line up at the reception desk of the Porto Myrina Palace resort on the island of Lemnos. They've just arrived for a holiday of windsurfing, scuba diving and water skiing. Resort manager Matt Goodwin is an Australian who fell in love with Lemnos as a tourist. He explains the challenges of running a resort here.

MATT GOODWIN: These northern Aegean islands, such as Lemnos, have the issue that we don't get tourism for six months a year. It really is only centered around to a maximum three months a year. So any changes to sort of the net profit for whatever we do will have effect on how long we can operate sometimes.

KAKISSIS: That's why he's nervous about the big tax increase that merchants here will have to pay starting this fall. The Aegean islands paid less tax for years to compensate for the high transportation costs to and from the mainland. Starting in October, they will have to pay the same value-added tax, as it's called, as the rest of Greece. Like other hoteliers on the island, Goodwin says the resort will manage for now.

GOODWIN: We've made the decision not to reflect in the prices. We will absorb it for this year, and, of course, it's something we review every year.

KAKISSIS: And every year counts on Lemnos, which has only courted tourists for about 20 years. Before that, its economy was dependent on a large military base that's now much smaller. I meet tourism consultant Kostas Katenidis at a busy beach bar. He says the new tax is coming just as Lemnos is branding itself as an unspoiled paradise.

KOSTAS KATENIDIS: The food is traditional. The products are traditional. And the life - the way of life is traditional also. We have in total over 110 beaches, and they're so isolated in summer. In the middle of summer, you can be on the beach by yourself 6, 7 kilometers long.

KAKISSIS: I meet Foteini Garali at the artisanal food shop she's run for eight years. We sit in the kitchen, where she makes a special local pasta called flomari.

FOTEINI GARALI: (Through interpreter) This pasta was unknown in Greece until tourism helped their products become known all over Greece and outside of the country as well.

KAKISSIS: Garali says she's reluctant to increase her prices now, just as Lemnos is becoming well-known.

GARALI: (Through interpreter) We'll get a bad name here in Lemnos. Pretty soon, people will start saying, no, I'm not going back to Lemnos because it was just too expensive.

KAKISSIS: At a nearby village, winery owner Petros Hatzigeorgiou says he will also swallow the tax increase, even though he expects the cost of the imported wine bottles he uses to double. He gestures to a group of Czech tourists sampling his white wine. They buy several bottles. He wants to make sure they return next year.

PETROS HATZIGEORGIOU: (Speaking Greek).

KAKISSIS: "We cannot fight this tax by protesting," he says. We can fight by being more productive and by changing the way we work. For NPR News, I'm Joanna Kakissis on the island of Lemnos, Greece.

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