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Victoria Mindova

Seven hundred thousand delinquent tax payers throughout Greece owe over eight billion Euros. According to data by the Ministry of Finance, in 2010 IRS must collect 20% of the outstanding financial obligations on time, from businesses and individuals. In real numbers this means €1.6 billion of late payments, which will enter into the state treasury by the end of the year. 

It is important to note that the total amount of arrears (also according to the Ministry of Finance) is €32 million, €16 billion out of which are debts of phantom companies. In other words, firms set up to drain tax money and other type of financial fraud, which makes the sixteen billion uncollectable. Another seven billion Euros are debts of individuals, working freelance, and enterprises that have declared financial bankruptcy and cannot meet their obligations. One billion Euros is the debt of state enterprises, which is also considered uncollectible. Thus the total amount remaining to be collected from the arrears of the citizens and businesses remains eight billion Euros. The government apparently does not believe in the effectiveness of the regional tax authorities and aims to collect only 20% of the outstanding liabilities. Tax authorities are expected to put in action all legal means in order to recover part of the outstanding obligations and even to confiscate assets. 

The 2010 budget provides €57 billion of income tax collection from regular taxpayers. Collection of late payments enables additional revenue that was not included in calculating the budget. Experts claim that this way the government is taking out a "trump" and is approaching a step closer to its ultimate goal of the reform of the tax system - quickly and effectively reducing the state deficit. 

An important task of tax reform is to optimize the activities of tax offices and especially to improve their control functions. For this year the program of the government for Stability and Development provides €2.4 billion of additional revenue measures to combat tax evasion and optimization of social security contributions. Finance Minister Giorgios Papakonstantinou provides 10.6% increase in revenue collected by tax offices for 2010. 

In connection with the tax reform, an interesting proposal was given by the General Confederation of Greek workers, who offer for the amount of annual tax-free annual income to be kept. The confederation welcomed the initiative by the government to request receipts for purchased goods and services rendered, but were opposed to their direct link with the minimum taxable income. Unions offer for its value not be reduced to six thousand Euros and to be added up receipts until the total amount of annual income but to set the annual amount of expenditure as high as €12 thousand. According to the President of the Confederation Dimitris Simakopolos "this measure will not benefit the citizens, but it will only hinder them." The goal of PASOK’s government by this measure to press tax rogue traders and businesses will not be achieved. 

Unions offer the minimum annual income to remain 12 thousand Euros and for it to increase in cases where only one member of the household is working. In particular, if in a family without children only one spouse is working, the annual tax-free income can be converted by 50% or at 18 thousand Euros. In a family with children, its value should be increased by 30% for each one of them. So a family of four with one working spouse and two underage children will be entitled to 25 thousand Euros annual tax-free minimum. At a press conference called "Our proposals for tax reform," the confederation of Greek workers made a proposal to tax stock deals and transactions. These and other proposals of the unions associated with changes and optimization of the tax legislation will be introduced next week to be discuss in the working group, responsible for the ultimate form of the tax reform.