A new round of tax increases, envisioned in the current third memorandum with institutional creditors, are due to take effect in October through January 2017, measures that will affect millions of taxpayers and consumers in the east Mediterranean country of 11 million.
By G. Palaitsakis
A new round of tax increases, envisioned in the current third memorandum with institutional creditors, are due to take effect in October through January 2017, measures that will affect millions of taxpayers and consumers in the east Mediterranean country of 11 million.
The upcoming tax measures come months after VAT rates were raised to 24 percent, along with surcharges slapped on beer, subscriber television fees, higher tax rates on income and a so-called “solidarity tax” also deducted from salaries and pensions.
What’s next are increases in special fuel charges, higher road fees and taxes on everything from tobacco products, coffee, “electronic cigarettes” to landline telephone connections.
One of the more high-profile measures entails an abolition of a 30-percent discount in VAT rates for Aegean islands, a particularly “painful” decision, in terms of “political capital”, given that the current leftist government had repeatedly vilified past considerations of eliminating the discount, and in fact promised to retain it.
Beyond the repercussions on the economy from another “tax tsunami” and the resulting negative effects on public opinion, the Tsipras government must meet revenue targets in order achieve a primary budget surplus goal of 0.5 percent of GDP for 2016 – a memorandum-mandated obligation.
Nevertheless, arrears to the state now exceed 90.5 billion euros, although a good portion of that immense figure is debts dating back, in some cases, several decades, or owed by deceased taxpayers and companies that have long since ceased operations without even going through the bankruptcy process.
Furthermore, the end of September is the deadline for payment of the first installation of property taxes in the country for 2016, a process that will affect 6.3 million taxpayers and legal entities, from listed corporations to non-profit institutions. The government has provisioned 735 million euros from the property tax, known as ENFIA in Greek.