Transcript The Islands - EESC European Economic and Social Committee

The need for specifically
targeted European policies
towards islands: The need for
VAT special regimes
Chamber of Lesvos
Speaker: Evangelos I. Myrsinias (president)
The Islands
 Islands generally have small size
 Islands are remote and well away from big national markets
 Islands possess very small local markets
 Islands suffer from high transportation costs (passengers and goods)
 There is a high energy production cost, and some of them suffer
from energy shortages
 Islands cannot achieve economies of scale
 Islands have scarce water resources
 Islands are vulnerable to external influences
 The best people of islands immigrate due to the lack of chances back
home
 Vulnerability of island cultural and economic environment
How to achieve development on the
islands
1. Development of insular entrepreneurship
2. Island transportation planning
3. Tourism development and promotion of local production
to the international market
How can European and national policy assist the
islands in order to achieve level playing field
 Special VAT Regime for the
islands
 Tax incentives for investments in
the islands
 For European border islands
taking into consideration the
policies of countries that are not
EU partners - the case of Turkey
 For islands that face the danger
of tourism destruction due to the
immigration and refugee crisis
implementation of specifically
designed policies
Gross domestic product (GDP) in Purchasing
Power Standards (PPS) per capita in EUR
Gross domestic product (GDP) in Purchasing Power Standards (PPS) per capita in
EUR
North Agean
7%
East Macedonia and Thrace
7%
Central Macedonia
7%
South Agean
11%
West Macedonia
8%
Crete
8%
Thessaly
6%
East Macedonia and Thrace
Central Macedonia
West Macedonia
Epirus
6%
Attica
11%
Thessaly
Epirus
Ionian Islands
Central Greece
Ionian Islands
8%
Peloponessos
7%
West Greece
Peloponessos
Attica
Crete
West Greece
6%
Central Greece
8%
South Agean
North Agean
Areas of EU where special VAT regimes or
exemption of VAT are applied
The implications of special tax regimes for the
islands – the case of the Aegean Islands
 Substantial increase of living
costs
 Loss of insular competitiveness
 In some cases complete
destruction of tourism where non
EU members apply free tourism
zones and these islands face the
implications of immigration refugee crisis
 Low utilization of the big public
EU and National investments on
the infrastructure
 Incentives for tax evasion
 Eventually decrease of public
revenues will occur
 It is better to concentrate on the
VAT Tax Efficiency
VAT TAX EFFICIENCY
VAT for private
consumption
14,79
13,45
4,8
VAT RATE
20
21
5
VAT
EFFICIENCY
0,74
0,64
0,96
CZECH REPUBLIC
FINLAND
FRANCE
GERMANY
GREECE
HUNGARY
IRELAND
ITALY
JAPAN
KOREA
NETHERLANDS
POLAND
PORTUGAL
SPAIN
SWEDEN
SWITZERLAND
14,2
16,27
12,27
12,48
9,74
14,28
13,94
10,09
4,27
7,8
15,96
12,77
12,55
9,04
19,77
6,58
19
22
19,6
19
19
20
21
20
5
10
19
22
21
16
25
7,6
0,75
0,74
0,63
0,66
0,51 - 0,45*
0,71
0,66
0,5
0,85
0,78
0,84
0,58
0,6
0,57
0,79
0,87
UNITED KINGDOM
9,92
17,5
0,57
11,85
17,35
0,71
*0,45 in 2011
COUNTRY
AUSTRIA
BELGIUM
CANADA
AVERAGE (NOT INCLUDED
GREECE)
Conclusions
 The abrogation of the special VAT Regime for the Aegean islands is a violation of the
Insularity Principle according to Article 174 of the EU Treaty.
 The special VAT Regime for the islands is not a provision to the islanders, but it is a
development measure which is directly benefiting the competitiveness of insular
economies.
 In the Aegean island case we predict that most islands will be devastated and local
inhabitants will leave the islands.
 Public revenues will decrease as our studies prove
 The only beneficiary from the abolition of the Special VAT Regime on the Aegean
Islands will be non EU countries
 The abrogation of the Special VAT Regime on the Aegean Islands will set an example
for the rest of Europe and of course for the other European islands