[ISL] "Ruining Rhodes: Greece's VAT proposal leaves islanders feeling deserted"

[rfmcdonald]

The Guardian features Angelique Chrisafis' article talking about how a new fiscal regime in Greece will hurt the Greek islands' economy. The major problem, alas, is that there really isn't any plausible scenario where Greek islands--especially the most remote and the less touristed--can avoid receiving cuts. The spectre of rural and insular depopulation in Atlantic Canada raised in the comments of this article is entirely relevant.

Just outside the medieval walled splendour of Rhodes’s old town, tourists and locals sip iced coffees at the pavement tables of the Gran Caffe restaurant and bar. Its owner, islander Seltsouk Atakli, is laughing and joking with customers. “Keep smiling is what I always say,” he shrugs. “But sometimes a smile is not enough.”

As the latest proposed deal to avoid Greece’s bankruptcy threatens to unravel, a row is raging on Rhodes and several other Greek islands over fears that they are being unfairly targeted. To the surprise of locals, one of the government’s proposals to its creditors is to get rid of the special lower VAT rate that applies to a number of Greece’s far-flung islands – not just the famous tourist destinations of Mykonos and Santorini, but scores of little-known smaller islands with ageing and depleting populations.

Greece has thousands of islands scattered over a vast area, fewer than 250 of which are populated. Some of those furthest from the mainland have long depended on a special VAT rate 30% lower than elsewhere, which offsets the high cost of having to ship basic everyday goods long distances.

Rhodes, Greece’s fourth largest island, is a case in point, along with all the other Dodecanese islands scattered at the country’s furthest south-eastern point between Crete and Turkey. Sunbathers on Rhodes can contemplate the nearby Turkish coast from their loungers, while Athens is more than 230 nautical miles away. Everything from milk to medicines has to be transported here. Many other countries have similar reduced VAT schemes to support isolated territories, such as Spain’s concessions to the Canary Islands. Indeed, for years the special rate for far-flung Greek islands was considered untouchable.

In January’s Greek election, the radical left party Syriza topped the poll in Rhodes, where islanders believed the special lower VAT rate was protected. A Syriza spokesman this week acknowledged that scrapping the special VAT rate would have a repercussion on island residents. Syriza’s coalition partner, the rightwing Independent Greeks party – keen to court voters on islands – has vowed this week to oppose any abolition of the special island rate “even if the government falls”.