By Thanos Tsiros
The expected “bill” from various increases of direct and indirect taxes is expected to reach a projected 7.2 billion euros in less than 10 months in order for the Greek government to reach an agreement with institutional creditors, which at this point means a conclusion to the elusive first review of the Greek program (third bailout).
According to a detailed list of measures compiled by “N”, the oft-repeated promise of “protection” of low-income families that the leftist government has used as a banner to accentuate its policies and ideology will take a knock, as the tax-free ceiling for annual income will probably be lowered in order to expand the tax base (downwards) while a variety of hikes to indirect taxes and a rumored increase in the VAT rate will affect lower incomes more.
Despite repeated tax increases taken by successive Greek governments since the crisis began in 2009, revenues collected by the state have continually slackened, with total proceeds streaming into state coffers for 2015 only reaching 43.6 billion euros. As such, the proposed increase of 7.2 billion euros from the latest package of measures corresponds to 16.5 percent of that figure.
The other critical variable in the Greek government’s fiscal “arithmetic” is the actual amount of money it will take in, regardless of higher rates for practically all forms of taxes, fees and charges.
For instance, despite an increase in VAT rates in 2015, nearly 1.5 billion euros less was collected last year as opposed to 2014 – 44.225 billion in 2014 and 43.614 billion in 2015.
Meanwhile, tax hikes decided in 2015 will soon come on line, with more islands set to lose their lower VAT rate regime. A list of those islands is pending.
Legal entities will be bumped up to the 29-percent tax rate, up from 26 percent, while farmers and self-employed professionals (doctors, lawyers etc) are also obliged to pay a greater tax advance of yearly expected income. Reductions in the fuel subsidy enjoyed by farmers have also been decided.
