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Victoria Mindova

A quick court trial and jail expects the Greek citizens who owe the state over 5,000 euros starting from the first of August 2011. The measure was voted in the spring of this year, but enter into force next week. According to calculations of the government, currently more than 900 thousand individuals and companies owe about 41 billion euros to the tax authorities, social security funds and municipalities. 1.6% of the debtors in the list of late payments have to pay 37 billion euros or in other words they constitute 90% of the black hole in the revenues.

After being informed of the exact amount of their obligations, citizens will have to head to the nearest district tax office. There they can arrange the repayment mode, which allows deferred payment for 36 months. The lack of liquidity and the hundreds of thousands of bankrupt companies over the past two years are just some of the prerequisites which suggest that even with the rescheduling many citizens will not be able to pay the amounts they owe. Remains the prospect of imprisonment as provided by the new law because of unpaid VAT and other payments.

GRReporter sought the opinion of the President of the Panhellenic Federation of Accountants and tax experts Abraham Panidis about the new law and the problems of the tax system.

What do you think about the new law which will imprison citizens who can not repay their obligations to the state?

This measure is completely unenforceable and will remain only on paper. We don’t have enough jails to imprison a quarter of the working age population, because it owes money to the state. Most of them do not have the money to pay their debt, so it would have been much better to find some other measure that would be more efficient. Some of those who owe large sums may and need to be sentenced through a rapid procedure but in general the law is not applicable to the general mass of citizens who owe money to the public sector. I think this law is ineffective.

Why was it adopted then since practically it can not be applied?

I want to believe this was done so as to scare a bit the taxpayers who owe money and thus give them one more incentive to pay the overdue payments. I want to emphasize that similar was also the measure imposed to seize the property of those who have collaborated with the public sector, but then they did not meet their obligations. It is much more effective and with better results than the law of quick court trial and imprisonment of debtors. Everyone in Greece knows how public auction were won until yesterday and cooperation with the public sector was achieved. Many people have gained a lot of property from such activities and their seizure when someone fails to repay his debt to the state is a much more logical and applicable measure than imprisonment.

You mean liabilities such as unpaid VAT and profit tax or the overdue payments also include the unpaid social securities such as those employed in the liberal professions (TEVE)?

For the moment, it has not yet been specified, but in general this concerns primarily taxation and fines on overdue payments. Overall the liabilities along with the penal interest are so large in most cases, that I find it impossible to repay. About 90% of the 41 billion euros will not be repaid and if the government manages to collect 3-4 billion euro of the total amount it should be glad.

The new tax rules and measures adopted by the Mid-term recovery plan 2011-2014 come into force from September. What do you think about them?

Starting with September a tax hail is expecting us. With the end of summer all employed in a liberal profession will pay a patent tax each year in the amount of 300 euros, except the income tax. All taxpayers who declare 12,000 euros or more will have to pay extra tax on the revenue between 1% and 5% depending on its amount. In addition a second additional tax is introduced in the amount of 5% for owners of vehicles over 1900 cc. Second tax amnesty for businesses and liberal professions that were not subjected to tax audit from the year 2000 until today. The nontaxable base on property will be reduced, and an additional extra tax for the owners who own one or more properties with a total value of over 400 thousand euro is also introduced. The VAT for restaurants, caterers, cafes and nightclubs will be increased from 13% to 23%.

Do you think that all these measures will yield the expected revenues, especially in times of recession?

The critical sectors for the Greek economy are three - tourism, shipping and construction industries. These sectors should be protected, but today's tax system is not conducive for that. Greece has no serious heavy production. Most goods and products that are produced here are the result of agriculture or derivative thereof, as well as the food industry. Heavy industries are not as prevalent. Therefore I consider the present policy to be wrong. Currently, most Greek companies that want to stay and not to go bankrupt export to Bulgaria, where there are better macroeconomic conditions and lower taxes. You understand that with these measures, most companies from northern and Macedonian Greece are exported to neighboring countries and thus there are jobs lost and production power. The measures are not correct.