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Tax crackdown on Greek isles pays dividend for state

Proceeds from Mykonos, which has been a magnet for the international jet set for decades, rocketed by 170 percent © AFP/File / Aris Messinis

Athens, Greece, Sep 22 – Cash-strapped Greece, under pressure from creditors to improve chronically poor tax collection, has landed a surprising windfall from a cluster of high-end tourist islands, revenue officials said Thursday.

In August, the height of Greece’s busy tourist season, sales tax proceeds exceeded targets by nearly 10 percent, the finance ministry said.

Overall, revenue from the main tourist islands increased by 62.3 percent to 32 million euros ($36 million).

Mykonos led the way, with proceeds from the island that has been a magnet for the international jet set for decades rocketing by 170 percent.

Similarly, Rhodes clocked an increase of over 165 percent while Santorini added another 114 percent over forecasts.

The government last year scrapped tax breaks for the top tourist islands, and this year introduced a temporary shutdown for businesses caught evading tax.

In June, maximum sales tax was increased by a point to 24 percent, to loud complaints by tourism operators.

Inspector raids were also stepped up, while the greater use of credit cards owing to capital controls in force since last summer also helped. Payments on cards, instead of cash, are easier to track by authorities.

Greece, rescued by three multi-billion bailouts since 2010, has been habitually told by its international creditors to improve its tax collection in order to plug its chronic budget shortfalls.

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