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Outstanding liabilities to the state, of physical and legal entities in Greece, have reached nearly 60 billion euro. In 2009, they amounted to about 32 billion euro. The economic crisis has created additional difficulties in terms of the repayment of accumulated tax and social security liabilities.

According to the General Directorate of State Revenue, in June 2013, outstanding liabilities of citizens and businesses amounted to exactly 59.77 billion euro, or about one-third of the GDP. In just one month (between May and June), these liabilities increased by 613 million euro, and for the first half of this year, the increase was 3.7 billion euro.

Head of the General Directorate of State Revenue Harris Theoharis attributed the uncontrolled increase in arrears to three main reasons. The first is the reform of the tax system, which is currently being carried out. So far, it seems that it has been impeding tax authorities’ work in terms of revenue collection to the state treasury, but according to Theoharis, the reform will yield results in the medium term.

Delays in the adoption of new legislation in order to facilitate the payment of outstanding liabilities of taxpayers are considered to be the second reason for the huge debt of the private sector to the state.

The third, but probably the most important reason, according to Theoharis, is the fact that the deep recession that has already been continuing for six years, together with high unemployment (27%), have contributed to the accumulation of uncollected tax liabilities.

In Greece, taxation of individuals is not only based on incomes of citizens, but also on a tax base (estimated income) regardless of whether the taxpayer has incomes or is unemployed.

For example, if a citizen has lost his or her job more than a year and a half ago, he or she does not receive help from the labour office, but if he or she still owns an apartment or inherited house in the village and probably a car, this citizen will have to pay a tax on the estimated income he or she might have in order to maintain his or her assets. Thus, tens of thousands of Greeks who are outside the labour market, following the deepening of the crisis, are being charged with heavy taxes, no matter that they are supported financially mainly by relatives.

In an analysis of the economic situation in the country, Naftemporiki newspaper directs serious criticism towards the government because of the state of public finances.

"He (Harris Theoharis) admitted that during the planning and setting of targets for revenue collection, the Ministry of Finance did not estimate the depth and duration of the recession, nor the impact of mass unemployment, in which the number of unemployed is approaching 1.35 million. We must not forget that the recession and unemployment are the result of the government policy (in cooperation with the Troika) and it is more than obvious that the Ministry of Finance had to take into account the side effects of these two factors," reads the online edition of the newspaper.

Since 2010, the Greek government has shown some success in terms of the challenges associated with public revenues. Official data of the General Directorate of State Revenue show that the state collects on average about 34% more overdue liabilities on an annual basis. This improvement in the system, however, does not have practical effects, since citizens’ indebtedness increases along with the improvement of collections.

Higher taxes, lower incomes, higher unemployment and inefficiency of the tax administration are the factors due to which just over two million people in Greece owe the state more than 21.5 billion euro. Of these, liabilities amounting to eight million euro are in the medium-term repayment mode, which is less than 0.04% of the total unpaid liabilities.

According to the International Monetary Fund, the majority of overdue obligations of individuals are due to imposed penalty interest, which is almost never paid. In addition, businessmen’s unpaid VAT has reached 13.3 billion euro this year, while the income tax obligations amount to 19.6 billion euro.

The Ministry of Finance hopes that by extending the programme for repayment of outstanding debts, the problem will be partially solved. Government critics point out that it is too late to take any measures, because the majority of taxpayers are now left with no spare money or are unemployed.

Government offices, however, are thinking of tightening the control as of the autumn and in the event of non-payment of liabilities, they will begin confiscations and seizures of accounts, even if the taxpayer’s monthly wages are deposited in the specific bank account.

By June 2013, budget revenues were 5.4% less than the target in the recovery programme. Besides outstanding liabilities, other reasons for the lower income in the state treasury include the 145 million euro less taxes on personal income, as well as another 100 million euro loss from VAT, 90 million euro less than the originally planned taxes on real estate and 60 million euro less taxes on paid services.