Citing its neighbour and tourism competitor, Cyprus, as an example, industry insiders in Crete are urging the government to cut taxes in the tourism sector to help stave off this season's economic slowdown which is expected to hit bookings.

Recently, Cyprus announced wide-ranging tax cuts in the tourism industry, which represents some 10.6 percent of its gross domestic product, and has warned bookings could fall by 20 percent in 2009.

Cypriot authorities said they planned to cut the value-added tax charged by hotels for overnight stays to 5 percent, from the present 8 percent, and would also forfeit part of the government’s earnings from airport landing fees and encourage domestic tourism through subsidies.