Tax hikes have failed to pay off

The recent hikes in indirect taxes have not fetched the desired results, leading instead to a 247-million-euro shortfall in state revenues, according to figures issued on Wednesday by the State General Accounting Office.

The increases in taxes on heating oil, gasoline and cigarettes (including products for electronic cigarettes), as well as the abolition of the discounted value-added tax on a number of Aegean islands, failed to bring the additional revenues the budget had foreseen in the first four months of the year.

The picture as far as income tax is concerned is similarly negative, as takings lagged the target set for the January-April period by some 190 million euros.

The data may raise concern but it should be noted that budget revenues followed a similar course last year too, showing a decline up to June before starting to rise. Of course this won’t appease the Finance Ministry as there is no sign in the data collected that the lag in revenues is coincidental or temporary. Ministry officials believe the gap will again be covered in the latter half of the year when income tax payments start (the first installment is due by end-July) followed by the Single Property Tax (ENFIA).

The ministry also expects takings from indirect taxes to beat their target for the year. This estimate is based on the improved tourism forecasts for this year compared to last. Monitoring authorities are already laying the groundwork to contain tax evasion this summer season, at least at the popular tourism destinations.

The drop in revenues has not had a significant impact on the overall picture of the budget as the primary surplus amounted to 1.7 billion euros in the year to end-April against a target for 798 million euros. For this high result to be attained the Finance Ministry has considerably curtailed expenditure, missing the target by 1.16 billion euros. State budget net revenues missed their target by 827 million euros, or 5.1 percent, amounting to 15.3 billion euros.