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The additional taxes on high incomes might turn out to be unconstitutional

27 November 2010 / 18:11:29  GRReporter
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A bomb – report that can cancel the revenue policy of the last two Greek governments submitted to the Supreme Administrative Court, the judicial advisor Yannis Gravaris. In it he pleads for the extraordinary tax which was imposed in 2009 to be declared unconstitutional. The adviser refers to Article 78 paragraph 2 of the Constitution of Greece, which prohibits the imposition of taxes or other financial burdens retroactively.

Further he emphasizes the extraordinary tax, which is calculated based on the income received before 1 January 2008 is illegal as it contradicts other constitutional regulations. According to it for example, only physical but not legal persons are taxed without the law to argue why this division is being made.
    The case reached the Supreme Administrative Court after a request of a taxpayer to be rescinded a requirement of the tax authorities, which has obliged him to pay additional tax for the amount of 10 000 euro. The tax was calculated on the basis of the income declared in his tax form for 2008, ie for income received during the previous 2007 year. The first instance of the administrative court ruled positively on the unconstitutionality of the tax, but the second instance judges had the opposite opinion, invoked on the public interest, which requires the law enforcement.
    In case the plenum of the Supreme Court decides that the extraordinary tax contradicts the constitutional regulations, the Greek state will have to repay the amounts to all who have paid additional tax or at least to find a way to deduct them from future taxes. A possible solution would call into question other extraordinary taxes that were imposed during the last two and a half years. Thus a lot of the measures the government adopted against the economic crisis and to reduce the government deficit will be canceled.
    For the first time the government of New Democracy imposed an additional tax on high incomes in September 2008. A year later it was again imposed on all income which exceeded the amount of 60,000 euros per year. For income up to 80,000 euro taxpayers were paying 1,000 euro and for income above 150 000 – 5,000 euros tax.
    Extraordinary tax in the range of 5-10% on profits imposed a year ago the government of PASOK to 305 companies and banks, which in 2008 had net profits of over 5,000,000 euros. The aim of the newly elected government of George Papandreou was to collect in the Treasury 870 million euros. According to Finance Minister George Papaconstantinou the measure was imposed to large companies with substantial profits which over the past five years have benefited from the reduction of tax rates and the time had come for them to participate in an act of "social solidarity". With a law voted in March this year a special tax of 1% was imposed on all individuals whose income in 2010 would exceed the amount of 100,000 euros. Then the measure was repeated twice more so that people with higher incomes were subject to three extraordinary taxes only in 2010.

Tags: additional taxes high incomes unconstitutionality economic crisis
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