With expected tax revenues far off expectations because of the effect of austerity measures, Greek taxpayers are being pushed to come up with 7 billion euros ($9.13 billion) in tax payments due this year at the same time the government is withholding tax refunds they are due in a desperate bid to backfill a more than 2.2 billion euros ($2.87 billion) budget hole.
Expected income took another hit when Greece failed to get a single bidder for its gas company DEPA, which was expected to bring in as much as 1 billion euros ($1.3 billion) and the state health insurer EOPYY has an estimated 1.2 billion euro ($1.56 billion) deficit.
Finance Minister Yannis Stournaras insisted, however, there will be more pay cuts, tax hikes or slashed pensions despite pressure from international lenders to find a way to make up the difference.
Instead, Greece will put the burden again on taxpayers who will be demanded to pay all their taxes in full despite austerity measures. That includes a third year of doubled property taxes as a 100 percent surcharge imposed in 2011 by then finance minister Evangelos Venizelos, the current PASOK Socialist leader who is Deputy Prime Minister in Prime Minister and New Democracy Conservative leader Antonis Samaras’ government.
The tax now looks to be permanent, and Alternate Finance Minister Christos Staikouras said another surcharge, this one on income tax and called a solidarity tax, has brought in 814 million euros ($1.06 billion) since it was put into force.
While tax cheats will continue to escape paying with little chance of being caught or prosecuted, the property tax surcharge is put into electric bills under the threat of having power turned off for non-payment.
The solidarity tax was supposed to go to help provide benefits for the rising numbers of unemployed but there was no answer from Staikouras whether it’s being diverted for other reasons, although Greek workers are also being assessed another tax on their income to pay for the unemployed.
The 7 billion euros target represents 3.5 percent of the country’s Gross Domestic Product (GDP) at a time when there is a series of more rescue loans also pouring in, but tax revenues are being used mostly to pay interest and repay banks and investors and not for social services although Greece is in a sixth year of recession with a record unemployment rate of 26.9 percent.
The government said about half the taxes due this year will come from income taxes and an income tax surcharge which is referred to as a solidarity tax but which Greeks dismiss as a “haratsi,” a derisive name from the Ottoman Occupation era because the fee is so onerous.
The “emergency” property tax that is now an annual assessment is expected to bring in 1.5 billion ($1.95 billion) as well in monthly installments.
The pile up has been caused by a series of delays in taxation and changed to the tax code, which led to revenues being 1.6 billion euros behind the target for the first half of the year.
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