High prices are putting pressure on Greek household budgets. They are also helping lift government tax receipts. nGreece is now expected to collect €30.777 billion in value added tax in 2026, according to revised estimates in the preliminary budget, €1.548 billion more than the €29.229 billion initially projected.
The increase does not come from inflation alone. Consumer spending, economic activity and stronger tax collection also affect VAT receipts. But higher prices are clearly part of the picture: because VAT is charged as a percentage of the value of most purchases, the amount collected can rise as prices increase even when tax rates remain unchanged.
That makes VAT particularly responsive to inflation. A more expensive basket of goods can generate more tax revenue for the state even as households find that the same income buys less. That strain is visible elsewhere in the budget.
Fuel Consumption Falls as Prices Stay High
Revenue from excise taxes is now expected to reach €7.176 billion, €283 million below target. The preliminary budget attributes the shortfall partly to lower consumption of energy products as prices remain elevated.
That distinction matters because VAT and fuel excise taxes respond differently to higher prices. VAT is calculated on the value of a purchase, while the excise tax on fuel is tied to the quantity sold. As a result, the government can collect more VAT from a higher priced transaction even as consumers respond to those prices by buying less fuel, reducing revenue from taxes linked to volume.
The two sets of figures therefore capture different effects of the same cost pressure: higher prices can increase revenue from one tax while weakening another by suppressing consumption.
Limits on Using the Extra Revenue
The government has already introduced energy support measures worth about €1 billion and one of the questions that have emerged is where they found the money to do so. According to information cited by OT.gr, the fiscal room for those measures came partly from lower than planned spending in 2025 and partly from €500 million in additional revenue linked to the digital work card, which the European Commission recognized as permanent revenue.
That does not mean the government can freely spend the additional VAT receipts. Under the European Union’s new fiscal framework, limits are tied to the path of net expenditure. Stronger revenue collection therefore does not automatically create equivalent room for new support measures.
That constraint is central to Prime Minister Kyriakos Mitsotakis’ request to European Commission President Ursula von der Leyen. Mitsotakis is seeking greater flexibility to use exceptional VAT revenue and is asking for temporary energy support measures, up to a specified limit, to be excluded from the relevant fiscal calculations. The request is aimed at creating more fiscal room to maneuvre by directing part of the additional revenue back to households and businesses facing higher energy costs.
For now, the imbalance remains straightforward: higher prices feed into VAT receipts automatically, while using some of that revenue to offset the pressure on consumers depends on the fiscal space available under EU rules. For now the Greek consumer pays the price for this imbalance.
Source: OT.gr
