ATHENS - Part of an avalanche of tax hikes and new taxes Prime Minister and Radical Left SYRIZA leader Alexis Tsipras imposed after swearing he wouldn’t, an increase tax on coffee - one of the most beloved commodities for Greeks as a partner for their unstoppable smoking - has just increased smuggling of the product.
That was the assessment of Mario Cerutti, President of the European Coffee Federation (ECF) who said that, “Such high taxation strengthens coffee smuggling and reduces the chances for investments,” Kathimerini reported.
Coffee is heavily taxed in Greece, starting wit basic taxes, a Valued Added Tax (VAT) and a special consumption tax that SYRIZA slapped on in a bid to bring in revenues, the tax hikes backfiring in many instances, increasing evasion and leading people to turn to smuggled products, including bootleg cigarettes sold openly on the street.
Trying to regain favor with voters, the SYRIZA government created a two-tier tax for coffee products in May - just ahead of elections for the European Parliament and Greek municipalities in which the Leftist candidates took a bad beating.
The VAT on coffee, tea and various other products was cut from 24 to 13 percent but only for products bought in stores and supermarkets, not at coffee shops and restaurants, creating some confusion over the costs for consumers.
Speaking to reporters at ECF’s annual general meeting that took place in Athens, Cerutti noted hen a special consumption tax was imposed on coffee in Italy, the VAT was scrapped and said it would be fairer to have a fluctuating tax based on the market rate of coffee.
Only four other European Union countries have a special consumption tax on coffee, namely Belgium, Croatia, Denmark and Germany. In Belgium though it’s only 6 percent, and 7 percent in Germany, half the Greek rate.
The ECF head also mentioned delays in special consumption tax rebates in cases where coffee was re-exported from Greece to other countries.