Finance ministry officials have sounded warning bells over the prospect of outstanding debts towards the tax bureau reaching 95 billion euros by the end of the year, up from the already stratospheric level of 90 billion euros today.
Concerns are being expressed due to a recent “tax wave” of austerity measures passed by the leftist Greek government last month, part of measures to ensure that Athens meets memorandum-mandated fiscal targets through 2018. The worries, simply put, are that already tax-burdened individuals and businesses will find it difficult to fork over an ever larger share of their incomes and profit margins to the state.
A figure of 27 to 30 billion euros in extra taxes, direct and indirect, is forecast for the end of December 2016, as this year’s primary budget surplus target is a modest 0.5 percent of GDP, rising in 2018 to a very ambitious 3.5 percent of GDP.
Nevertheless, if the 2016 target appears unattainable, then a dreaded automatic spending cut mechanism, dubbed the “cutter” by the opposition and local media, will be activated in the spring of 2017, i.e. across-the-board state spending reductions.
Greek taxpayers, both employed individuals and pensioners, saw lower figures in their paychecks and bank statements this month, as increased taxes kicked in and certain social security bonuses were axed. Moreover, prices at the shelves and for various services were also affected by a hike in the already high-end of the VAT rate, from 23 to 24 percent.
At the present rate, most wage-earners and medium-income level pensions with at least one property to their name will face payments of one or two tax bills every month, beginning in July 2016.
