EU Upset Tsipras Suspended VAT Hike on Refugee Islands

Leipsoi island, Greece. (Photo by Eurokinissi, file)

The European Union is unhappy that Prime Minister and Radical Left SYRIZA leader has exempted Greek islands keeping 15,000 refugees and migrants in detention from a Value Added Tax (VAT) hike he agreed to impose on the rest of the country, reneging on anti-austerity promises.

The EU said Tsipras had not cleared his move with the country’s lenders, the Troika of the European Union-European Central Bank-European Stability Mechanism (EU-ECB-ESM) that put up a third bailout for the country in 2015, this one for 86 billion euros ($100.64 billion).

He sought and accepted the deal after saying he wouldn’t because it came with more of the crushing measures he swore to reject but then agreed to implement, including an avalanche of tax hikes and removing a VAT break for remote islands.

The EU wants the new discount for the islands of Lesbos, Chios, Samos, Kos and Leros to cease at the end of the year and not be continued as Greece struggles to deal with an overwhelming number of asylum applications after European countries closed their borders and an EU swap deal with Turkey was suspended.

An unidentified EU official told Kathimerini that a lower VAT for the refugee islands would cost the country 24 million euros ($28.08 million) in lost revenues that would have to be made up somehow even as Tsipras, sinking out of sight in the polls, also wants to get out of more pension cuts and other tax hikes in a feverish hid to regain favor with voters.

Tsipras said he would keep lower rates on the refugee islands – without extending the same exemption to remote islands relying on ferries for everyday supplies – “for as long as the refugee crisis,” with no end in sight.