A shortfall in projected revenues from income taxes and corporate taxes on individual taxpayers and businesses, respectively, widened by 216 million euros in August, Greece’s finance ministry announced this week.
Over the first eight months of the year, revenues from direct taxes on individuals and businesses reached 7.312 billion euros, down from a target of 7.931 billion euros, which means a shortfall of 619 million euros.
A bumped back date for payment of the first installment of the now permanent annual property tax means that the current month emerges as pivotal in meeting fiscal targets for 2017. Specifically, the deadline for paying the second installment of income tax - as calculated from fiscal 2016 - is Sept. 29, a date that coincides with the first property tax installment for title-holders in the country.
Meeting or exceeding revenue targets this month will be crucial towards reducing the gap between the sums that actually flowed into state coffers and the figure that was projected to have been collected.
On the margins of a joint press conference with visiting Eurogroup president Jeroen Dijsselbloem to Athens on Monday, Greek Finance Minister Euclid Tsakalotos again presented a positive scenario whereby revenues will actual exceed targets by the end of the year.
Nevertheless, data collected so far shows that the goal of 14.037 billion euros in revenues from income and corporate/ business taxes will not be achieved for 2017.
In its revised 2017 budget, the finance ministry had raised the annual revenue target by 658 million euros, with the reasoning holding that more types of imposed taxes and higher tax rates – the result of 2016’s tax “tsunami” by the leftist-rightist coalition government – would translate into a higher revenue total, in absolute terms. Higher tax rates in already tax-swamped and recession-plagued Greece resulted from a recalculation (mostly upwards) in the manner in which self-employed professionals' income is taxed, higher rates imposed on most income midrange to high brackets for a so-called “solidarity tax”, and an increase in the percentage of tax prepayments owed by self-employed professionals and craftsmen, among others.
Nevertheless, despite the higher tax rates, revenues in 2017 so far from direct taxes are even lower than in the corresponding period of 2016, 7.312 billion euros to 7.511 billion euros over the first eight months of 2016.
At first glance, falling incomes – of both wage-earners and the self-employed, along with mostly flat business turnover - and higher tax evasion appear to have doomed the finance ministry’s “calculus”.
Shortfalls are detected in revenues when comparing individual taxpayers and businesses, if calculated separately.
So far, direct taxes on individuals generated 5.069 billion euros in the Jan-Aug period, down from a target of 5.538 billion euros, a shortfall of 469 million euros; 1.465 billion euros were derived from direct taxes on legal entities, as opposed to a target of 1.582 billion euros, a shortfall of 118 million euros.
