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The new taxes drowned the pools

12 July 2011 / 15:07:39  GRReporter
7758 reads

Victoria Mindova

In the middle of the summer and the height of the sweltering heat, the Greek association of pools and spa equipment builders is giving a battle cry against the government along with the discontented, the civil servants, the unemployed and those working in different sectors of the economy. "They are suffocating us with new taxes," commented the President of the association Andreas Petridis, speaking exclusively to GRReporter about the problems of the sector and the difficulties the companies are encountering in Greece after the change in the business environment.

Petridis told that the turnover of the companies constructing and maintaining swimming pools in more remote areas of the country has dropped from 70% to 50% in just one year. The business that was profitable until a few years ago is barely dragging out today, said the chairman of the association, stressing that pools in Greece are not a luxury but a necessity. Most likely, many people will agree with him, especially if they are sweating in an office, but the Greek finance ministry is of another opinion.
The austerity plan outlining the Greek financial policy by 2015 defines the pools a luxury and imposes a luxury tax on them. An extra fee is added too that will apply in the next five years. In general, the pool becomes a dearly pleasure for the rapidly impoverishing average Greek, whose biggest problem until yesterday was what his acquaintances would say if they see him or her wearing the same bathing suit as last year. "The measures set out in the austerity program and the heavy taxes have made many people willing to build a pool at home to consider it well first. This trend will last between three and five years, which would prove fatal for the companies in our sector. "

About 200 companies are operating in the sector of construction and maintenance of swimming pools and spa equipment in Greece currently. They are also supplying the chemical mixtures needed for the maintenance and cleaning of the pools. Many companies are experiencing difficulties due to the market tightening, the low bank liquidity and the higher taxes. Almost all companies had to dismiss part of the staff or to reduce costs in other ways. Some companies in the sector have turned to do similar activities and the main sectors in which such companies are able to operate are construction or tourism.

Besides the heavy tax burden, the Ministry of Finance has imposed penalties for unregistered domestic pools. Andreas Petridis is certain that the government has made a serious mistake in counting the unregistered pools, saying that it is not possible their number to be 13,000 only in the northern suburbs of Athens. Even if the data are inconsistent, they can not be revised unfortunately and the data of the Ministry is taken as correct by default.

With respect to the high penalties, Petridis said that it is better the state to reduce them in order to legalize the unregistered pools and then to tax them each year, but of course the tax should be reduced. Another advantage of their legalization is that then they will be able to function normally, they will buy the necessary chemicals and accessories from licensed importers, and this activity will not be in the informal economy any longer. "It is one thing to pay a penalty fee of about five thousand euro, and another when the state requires the payment of fines of 40-50 thousand euro. It would be cheaper to the taxpayer to fill the pool with dirt and put an end to this drama."

According to Petridis, the pool at home has many more features than those taken into account by the tax authorities. He explained that many families after 20 years of savings prefer to make a small pool in the yard, rather than buy a second car in the middle class. "There are simple, cheap and practical pools that do not have to cost 200,000 euro. There are pools that cost 18-25 thousand euro, which are in the cheap to medium class." These pools are often found in homes of adults who have problems moving or are not able to go to the beach. The businessman added that the pools in the city help reduce the heat and cool the atmosphere in the muggy days. "Swimming has a social significance too," added Petridis, "for example, they enable you to keep children nearby and know who their friends are."

In its efforts to collect as much money in the Treasury as possible, the government of George Papandreou is taking unconventional and even funny steps at times. Such was the authorities' decision last year to use the popular application Google Earth to find out how many unregistered pools there are in Greece. Obviously, the old familiar method of tax inspections on site are not preferable and the tax employees relied on high technologies instead of sweating and going to the doors to check whether someone has not made a pool in his yard.

It is not certain whether this method is effective because people familiar with the matter claim that the pools can be covered in camouflage canvas that close the view from space. In addition, green-blue hues of plants and gardens can be taken for swimming pools. Despite the shortcomings, the Ministry of Finance found about 100,000 unregistered  pools across the country and imposed ruthless penalties. According to Petridis, if the government imposes a fine, which is calculated according to the dimensions of the structure and does not exceed 100 square meters, then the Ministry could collect about 400 million. It is a different matter whether they are collectible.

Currently, the state can not collect the duties from about 10,000 taxpayers amounting to 37 billion euro. In this sense, the imposition of new, higher taxes will lead to a deadlock in which the tax authorities will impose fines for unpaid fines, but no one will pay.

Tags: EconomyCompaniesPoolsPenaltiesRevenues
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