Tax revenue worries for ministry
Takings from value-added tax, income tax and dues from previous financial years have shown clear signs of fatigue in the first half of the year, leading to concerns among Finance Ministry officials who would shudder to think that last year’s problems might be repeated.
In 2017 the tax revenue shortfall led to a hole of almost 1.5 billion euros that was plugged by the excessive surplus of the Single Social Security Entity (EFKA). This year it is not at all certain that social security contributions will see such an overrun, as thousands of self-employed professionals have closed their private practices and set up companies instead to avoid the debilitatingly high contributions.
The data of the State General Accounting Office for the January-June period point to an increase in tax evasion, which would also reduce social security contributions as the latter are based on earnings.
There has also been a drop in collections from previous years’ taxes, both through installment payment plans to settle past debts and from the voluntary declaration of hidden incomes. Data further reveal a considerable decrease in revenues from bank account confiscations as in most cases the accounts are empty.
The situation with VAT is of particular concern to the ministry: Despite the fact that the rates were increased on most Greek islands from January 1, 2018, takings were down some 23 million euros in the first half of the year compared to 2017. It is now estimated that this year’s VAT collections will lag those of 2017 by about 90 million euros, in an economy that is supposed to grow 2 percent throughout the year.
Additionally, data analysis points to income tax takings coming in 306 million euros below the target set for the first half of the year, and 88 million euros less than the first six months of 2017. This is before the start of the key period for income tax, which is from July to November, when the three tranches are due to be paid.
