Greece Slows Tax Refunds, Investments

With tax revenues in January falling 241 million euros ($323 million) short of expectations as Greeks continued to slow spending in the wake of more austerity measures, the government is holding back tax refunds and investment projects rather than go after tax evaders who owe more than $70 billion.
The bad news came in the decline in Value Added Tax (VAT) receipts which have been falling precipitously despite a hike to 23 percent of the cost of goods. That has backfired as Greeks have reduced consumption of even basic goods, hurting tax collection efforts.
To compensate, the government slashed tax refunds to 45 million euros, ($60.3 million) compared with a 311 million euro target ($417 million) which means beleaguered taxpayers can’t count on getting their money back soon. The government also spent just 67 million euros ($89.8 million) on public investment projects, two-thirds less than the interim 200 million euro ($268 million) target, Capital.gr reported.
“The balance was positive in January but there’s no room for complacency,” Deputy Finance Minister Christos Staikouras said. “Attention and intensification of effort is required on the revenue side.” He made no mention of stepping up efforts to catch tax cheats while the government continues to impose pay cuts, tax hikes and slashed pensions on workers, pensioners and the poor. The government is required to pay back its international lenders before paying Greeks long overdue refunds.
Overall, the central government budget, which excludes spending by local authorities and social security organizations, posted a surplus of 159 million euros ($213 million) compared to a deficit of 490 million euros ($657 million) in the same month last year, according to finance ministry figures.
The primary surplus – excluding interest payments on the country’s debt – stood at 398 million euros, ($533.6 million) compared with a deficit target of 413 million euros ($554 million).
Many doubt the government will be able to continue using cutbacks to meet its budget goals and that it needs to increase foreign direct investments and find ways to raise revenues instead of only cutting spending. “Investors do not believe we can meet those targets,” Takis Zamanis, chief trader at Athens-based Beta Securities told Capital.gr.