The Best of GRReporter
flag_bg flag_gr flag_gb

IMF provides for new tax increases in Greece

27 August 2013 / 15:08:02  GRReporter
3666 reads

A report of the International Monetary Fund provides for a dramatic 12.4% increase in direct taxes in 2014 following the elimination of tax cuts and radical changes in taxation that would apply to incomes received in 2013, and for which more taxes will be paid.

The International Monetary Fund revealed that direct tax receipts in 2014 will increase by 2.1 billion euro and will reach 19.1 billion euro, compared to 17 billion euro projected to be collected this year.

An increase, albeit smaller, will also be marked in terms of indirect tax revenues and the International Monetary Fund estimated that these will reach 23.7 billion euro from 23.3 billion euro this year.

Revenues from social security contributions will mark a drop which will reach 24.2 billion euro from 24.6 billion euro this year, and compared to 26.5 billion euro in 2012.

Forecasts for the development of tax revenues will be reflected in the new medium-term programme for 2014-2017, which is currently being prepared, as well as in the budget for 2014.

Abolition oftax relief

As regards direct taxes, increased revenues will come primarily from the elimination of tax breaks, abolition of tax relief for families with children, raising taxes on rents and the increase in taxes for freelancers.

In this situation, notification letters for taxes due in 2014 will be very "stiff", which will further aggravate the financial situation of households and will increase outstanding debts to the state even more.

At the same time, the extraordinary (now fixed) "solidarity" contribution will continue to burden households even in 2014, as well as the property tax which will bring the same revenue - from 2.7 billion euro to 2.9 billion euro, regardless of whether it will be paid with electricity bills or directly at tax offices.

It should also be noted that the new increased taxes are being levied on continuously declining incomes, with the result that taxpayers are unable to pay them.

Concerns about the government's ability

In this situation, the IMF expressed concern over the ability of the government and the tax system in terms of raising the revenues that are provided and deal with tax evasion.

If there are obstacles in their efforts to combat tax evasion, the International Monetary Fund warned that measures will be taken in order to avoid fiscal deficit.

If Greek authorities have not overcome the problems of tax administration in the next month, the creation of a more reliable budget for 2014 will still need to be focused on the painful cost cutting, the International Monetary Fund noted.

Cuts inimportant socialspheres

It is also noted that in case of a slowdown in revenues from real estate taxes, if the government collects these via tax divisions, then more spending cuts will be needed in 2014 compared to what was provided by Greek authorities, including "targeted cost reductions in socially important areas."

The Tax Administration

Besides the careful planning of the new property tax, the International Monetary Fund wants new measures for the separation of the Tax Administration from the country's political leadership, since it believes that this will rectify the tax system’s shortcomings.

Also, the International Monetary Fund insists on the transfer of all cases of tax evasion which are now being investigated by the financial prosecutor to the General Directorate for State Revenues by October 2013.

In particular, in terms of the Tax Administration, it was noted that it has made some progress in terms of strengthening the autonomy of revenues, but new obstacles have arisen. It is also stressed that authorities have expanded the options of tax offices dealing with taxpayers with high incomes, but debts collection was lagging behind.

Tax burdens by the end of the year

And while the tax burden, prepared by the government for 2014 is huge, taxes that citizens are required to pay by the end of 2013 are similarly painful.

The payment of taxes due from notification letters was the beginning - the majority of taxpayers who submitted a tax return by 31 July, will have to pay the first instalment of the tax by 30 August. A lot of people have not received a notification letter yet and need to find information electronically via the Taxis system.

In particular, taxes that taxpayers need to pay in the next five months by December 2013 or by February 2014 at the latest are as follows:

1. Income tax for incomes received in 2012, which will bring the Treasury revenues amounting to 2.6 billion euro.

2. The special "solidarity" contribution, which will bring 960 million euro.

3. The fee for freelancers which will bring 200 million euro.

4. Owners of electrified property will bring 1.9 billion euro through their electricity bills to the general property tax.

5. Revenues from the property tax for the last three years are estimated at 1.5 billion euro. Relevant letters for 2011 and 2012 have already been sent to 500,000 owners, in which the average tax rate is about 1,000 euro.

6. Car taxes that must be paid in November and December 2013 will bring 1.2 billion euro.

7. The new luxury tax will bring the treasury 150 million euro.

8. 1.9 billion euro of outstanding debt should be collected by December 2013.

Tags: tax burden the International Monetary Fund cuts costs cuts
SUPPORT US!
GRReporter’s content is brought to you for free 7 days a week by a team of highly professional journalists, translators, photographers, operators, software developers, designers. If you like and follow our work, consider whether you could support us financially with an amount at your choice.
Subscription
You can support us only once as well.
blog comments powered by Disqus