Moonshine blues in Greece as EU demands tax hike

Distillers in Greece were aghast on Sept.25 over EU demands for the abolition of long-running tax exemptions believed to cost the cash-strapped state millions of euros in lost revenue.

Raki, tsipouro and tsikoudia -- cheap traditional beverages that are widely consumed in the country -- are currently taxed at half the rate of other alcoholic drinks.

On Sept.24, the European Commission pushed for the privilege to be abolished.

The Greek government has a month to respond, and unless the issue is resolved, Athens could be taken before the European Court of Justice.

Greece in August ratified a new three-year EU bailout that requires it to clamp down on endemic tax evasion.

The deal will also see Greece scrap privileges for farmers such as income tax breaks and cheaper fuel.

Top-selling newspaper Ta Nea on Friday said that Greece produces an estimated 10.8 million litres of illegal moonshine, nearly double the quantity declared to authorities.

This translates as a tax loss of nearly 100 million euros ($112 million euros), the daily said.

But distillers say the measure could drastically affect vine cultivation in the country.

"The tax increase will automatically cause a major crisis... vineyards that currently can find a market supplying distilleries will be abandoned," Stathis Fragiadakis, head of the distiller association in Heraklion, Crete, told Ta Nea.

"In our country, traditional drinks such as tsipouro and tsikoudia are used to show hospitality," Fragiadakis said, adding: "We do not have an alcoholism problem like other European countries do."