Bulk of wine consumed in Greece illegal – and excise tax not helping

An excise tax on wine introduced a year ago has resulted in a burgeoning illegal market rather than revenues, which the government had anticipated at 65 million euros per annum in the budget it presented to foreign creditors.

From the tax’s introduction in January and until June this year, it brought in just 4 million euros, and despite pressure from frustrated winemakers the government appears unable to say how much money the tax has brought in since.

The National Interprofessional Organization of Vine and Wine of Greece (EDOAO), responsible for the New Wines of Greece campaign, held a press conference recently to highlight what it sees as a failed tax, criticizing the leftist-led government for taking slapdash measures that don’t pay off and end up resulting in more taxes. Winemakers note that theirs is one of the only productive sectors that has managed to grow since the start of the crisis, raising exports and generating much-needed revenue for the state.

“The black market in wine has become highly organized since the excise tax was introduced in January. It existed before, but now the racket is run by big players,” said George Skouras, president of the Greek Wine Association (SEO) and a winemaker in Nemea, Greece’s biggest wine-producing region. “They have built tanks underground so they can’t be spotted by inspectors and have people scouring the countryside to buy grapes illegally, without invoices, off the books.”

Yiannis Vogiatzis, a vintner in northern Greece and president of EDOAO, added that experts estimate that 65 percent of wine consumed in Greece is produced and sold illegally and just 35 percent is subject to taxation. “The excise tax has ultimately acted as a punishment for those who want to do business legally,” he said.

Meanwhile, winemakers also have to deal with intransigent customs officials who insist that wine dealers have to prepay the excise tax on the stock they are planning to sell from their tax warehouses or face closure of their production units.

Skouras says that winemakers are not necessarily opposed to the tax itself as much as they are to the fact that they were not consulted so that the whole thing could have been done more efficiently. They are also unhappy that there is no way for them to pay the tax in installments instead of upfront.

Authorities argue that tracing illegal producers and traders is a tricky task that requires a lot more manpower than what is available.

Dionysis Grammatikos, an agronomist in the Department for Vines and Olives at the Ministry of Agricultural Development, added that of the 111,000 vine growers registered in Greece, just 26,000 submit a harvest report every year, as stipulated by Greek and European legislation.

“So, the tax dodgers are registered. Why don’t you report them to the Finance Ministry?” vintner and distiller Costas Tsililis asked the official.

Grammatikos, who was quick to add that he is merely a ministry employee with no executive authority, shrugged and said: “We have informed the directorate responsible for special consumption taxes on numerous occasions that we can give them details regarding vine growers who don’t submit harvest reports and are therefore likely to be selling their harvest illegally. We have names and addresses in the first part of the production chain. But no one [at the Finance Ministry] has shown any interest.”