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A NOTE ON THE EFFECTIVENESS OF PRICE POLICY ON TOURIST ARRIVALS TO GREECE

 

 

 

Helen Gazopoulou

Bank of Greece

 

 

ABSTRACT

This paper aims at pointing out the adverse repercussions on the Greek travel industry resulting from the contradicting policy measures taken by the various governments due to the lack of a consistent strategy on tourism. The analysis takes as an example the reduction of the VAT from 11% down to 6.5% for hotel accommodation which has been followed by an increase of the VAT from 13% to 23% for certain categories of restaurant services. The paper concludes by underlining that the damage done is not so much the net negative impact of the two specific measures and their disappointing fiscal performance, as the adverse repercussions that they entail for the market through the confusion that they cause, thus discouraging both tourists as well as prospective foreign investors.

 

Acknowledgements: Many thanks to G. Zacharatos, P. Migiakis, and Z. Bragoudakis for their technical support and to Heather Gibson for her constructive comments when reviewing the paper. The views expressed in the paper are those of the authors and do not necessarily reflect those of the Bank of Greece.

 

JEL Classification: L83

Keywords: Tourism, Current Account

 

Correspondence:

Gazopoulou Eleni

Bank of Greece,

21 E. Venizelos Ave.,

10250 Athens, Greece.

Tel.: +30 210 320 2363

Email: egazopoulou@bankofgreece.gr



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