How the world sees Greece
Tax inspectors who did random audits between July 27 and August 2 found out that almost 90 percent of businesses that evade taxes do not issue receipts. According to figures released by the General Secretariat of Public Revenue (GGDE), 18 percent of businesses inspected evade taxes with an average of three tax offenses each. The
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By Dr Roman Lanis, Dr Brett Govendir and Dr Ross McClure* Blatant corporate and personal tax evasion contributed to Greece’s debt crisis, but it’s dwarfed by the tax avoidance of U.S. multinationals operating in countries like Australia. There’s a popular misconception that Greece’s debt crisis was self-inflicted. ‘The Greeks are a bunch of tax evaders! They
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One of the great puzzles of the Greek crisis has been the treatment of tax policy. While much has been written about tax evasion and the complicated tax system in Greece, very little, if anything, has been said, written or proposed at the highest EU levels to amend and restore a sensible tax policy in Greece. In fact, and with a view geared towards only debt repayments, additional taxes have been levied to the battered Greek economy and even more are coming. Which raises the question: Who's afraid of Greek growth? It makes absolutely no sense to expect that debt repayments can be made from an economy with a distorted productive base, focusing almost exclusively on tourism and low-value added exports, with the best of human capital of the country fleeing en masse abroad, and with taxes higher than any of the neighboring or competitive countries. It makes one wonder whether those proposing fiscal policies are even aware of the concept of elasticity (of consumer demand and of public revenues) or understand the structure of incentives for consumers and businesses. It makes us wonder why the focus is exclusively on one side of the coin (privatization, higher taxes, small share of few sectors that export goods) and not also on the other side (new domestic investment, FDI, lower taxes, high value-added exports on high technology and manufacturing goods, higher education). Is it not possible that Greeks will collect more tax revenues for debt repayments if they are allowed to push skilled based growth? Is it not possible that stable lower tax rates will provide incentives to local and foreign firms to set-up new entities and go into new sectors? Is it not possible that foreign firms would want to collaborate for production and trade in the door of Europe? Is it not possible that a new scheme of business incentives can make the lives of Greece and Europe easier? Or is it the case that any of the above, textbook-case, proposals will imply a smaller piece of the pie for the current strong players? It is our impression that our European colleagues are only interested to convert the physical and human capital abundant in public monopolies into private ones and have them sold abroad. Market structure that allows healthy growth through efficient competition does not change if we convert a public monopoly into a private one. Anyone that has passed Economics 101 understands that the Pareto optimal outcome is one that boosts welfare for everybody within the country by enlarging at the same time the pie, not redistributing the existing one into special interests (domestic or foreign). We have seen no comment on the distribution of taxes among different sectors of the economy as well. Where did our wise economic advisors read that increasing indirect taxes is good for the economy and the final consumer in a recession? Where is it written that a welfare state needs a 40 percent income tax rate, a 23 percent VAT tax rate and a 28 percent tax rate on business revenue? High tax rates are harmful for Greek growth right now; tax collection and tax evasion is a problem but you can't fight fire with gasoline. Without a larger pie we cannot possibly expect that Greeks will (finally) pay their (fair) share, to creditors and the Greek state. It looks like our European colleagues have categorized Greece as a place to only enjoy sea, sun and my girlfriend/boyfriend alone, neglecting the really high quality human capital we have, the location of the country and the significant stability entrenchment imposed in the entire region. We are all looking to our European and global partners to actively support our call for lower tax rates for Greece. We need now a new, fair, tax system that attracts investments to create new jobs; a tax system with lower, not higher, indirect taxes to help more of those in need; a tax system where collections can be made on taxes that make sense for consumers and businesses. In a global system that everybody works out his way with his comparative advantages, a mechanism of generating wealth for Greeks too must be in place, otherwise we find it extremely difficult to understand how a fast-aging economy with 25 percent + unemployment, severe humanitarian pressures and immense brain drain can ever pay even current needs if it is not allowed to grow. Let's put an end right now to the discussion about the service of Greek debt and the problems of the Greek economy. Unless someone is indeed afraid of Greek growth. This post originally appeared on HuffPost Greece. -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.
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ATHENS, Greece (AP) -- Dimitris Bokas keeps meticulous records of the bathroom fixtures he sells from his small shop in the quiet middle-class residential neighborhood of Koukaki near the center of Athens — just in case a tax inspector makes a surprise ...
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ATHENS, Greece (AP) — Dimitris Bokas keeps meticulous records of the bathroom fixtures he sells from his small shop in the quiet middle-class residential neighborhood of Koukaki near the center of Athens — just in case a tax inspector makes a surprise visit to ensure Greece's 23 percent sales tax is being collected and reported correctly.
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The new income tax code has hidden “traps” for Greeks living abroad and keep bank accounts and property, such as houses and cars, as they will have to file an income tax return in Greece. The tax code is based on living standards evidence and, according to the evidence, individuals with property who have also received at least 1 cent in interest from their bank accounts are taxed as having “income from business activities.” This means they have to file a tax statement in Greece, where they have to pay 26% of their income in taxes and an advance 55% of next year’s taxes, as applies to businesses operating in Greece. Even if their actual income is a few cents from interest. Moreover, if Greeks live abroad and keep houses in Greece, which they visit and stay even for one day, or use cars they own, they have to pay taxes based on their living standards. The above individuals are to pay taxes on taxable income of 4,000, 5,000, 6,000, even up to 10,000 euros.
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enfia A conflict within the Greek government was generated over the potential continuation of the single property tax (ENFIA). According to the ...
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A conflict within the Greek government was generated over the potential continuation of the single property tax (ENFIA). According to the creditors, the continuation of the ENFIA tax is included in the list of proposed reforms, while the government spokesperson flatly denies it. Government spokesman Gavriil Sakellaridis stated on Monday evening on Greek television that the ENFIA tax is “unfair” and will be abolished, so it will not be collected in 2015. It will be replaced by a large property tax, he said. Sakellaridis also denied that there was a conflict within the Greek negotiating team and particularly between Finance Ministry advisor Elena Panaritis and head of Council of Economic Advisors (SOE) Giorgos Chouliarakis. Both parties have denied allegations of conflict between them. Sakellaridis’ statements came after an alleged leak from the Finance Ministry that the collection of ENFIA tax in 2015 is included in the list of reforms presented to the Brussels Group, the group of lenders’ representatives who evaluate the proposed reforms. They claim that revenues from ENFIA are calculated in the 2015 budget. Prime Minister Alexis Tsipras has repeatedly stated that ENFIA will be abolished and will be replaced by a new tax for large properties. There is no mention of ENFIA or a new property tax in the Finance Ministry leaks, according to the government spokesperson. Deputy Finance Minister Dimitris Mardas in statements to Greek television said the implementation of the law that will replace the sigle property tax is postponed for a while. “Another solution is being sought,” Mardas said, adding that this solution will be beneficial to low income households. However, Finance Ministry officials say that it is impossible to implement a new property tax within 2015. Analysts say it might be necessary to collect the ENFIA tax for another year in order to balance this year’s budget.
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Since Friday, when the express-settlement for the arrears to the State was put into effect, some 18 to 20 million euro have flown into the state coffers on a daily basis, while on Monday alone revenues reached 50 million euros, Greek Alternate Finance Minister Nadia Valavani told ANT1 TV on Tuesday. She also made clear that this specific settlement will not be extended. The Uniform Real Estate Ownership Tax (ENFIA), Valavani said, will be replaced by the large property tax while the so-called objective property values need to be changed first. For this reason, a special committee is being set up, with the whole process expected to be completed by May. Regarding the issue of the VAT rate for the islands, she said it was still under discussion and no final decision has been taken yet. She ruled out an increase on heating oil tax. On the country’s lenders, she said that “based on the February 20 agreement, we inform of everything we are doing,” citing as an example the disagreement on the 100 installments settlement, on which she said: “They did not want any regulation, they wanted the creation of tax conscience, which is fair.” “The tax system is not fair and is class-based,” she commented on the current tax system, highlighting the over-taxation of weaker strata and added: “If we do not change this, we, as a government, have no reason to exist.” “The changes in the tax system and the tax reliefs will be ready in the second half of the year,” she said. (source: ana-mpa)
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Greek government anti-corruption chief Panagiotis Nikoloudis is investigating 80,000 wealthy Greeks who are suspected of having at least 200,000 euros each in undeclared funds in bank accounts abroad. The SYRIZA government has pledged to tackle tax evasion. On Monday’s meeting with German Chancellor Angela Merkel, Greek Prime Minister reiterated that Athens is determined to put an end to tax evasion and establish a more fair tax system. Recently, the German government has offered to send tax experts to assist Greece in battling tax evasion. Nikoloudis told The Times that the original list of 2,000 tax evaders, the famous “Lagarde list“, which was compiled by the International Monetary Fund and handed to the Greek government in 2010, is just the tip of the iceberg. “I’m not concerned about the so-called Lagarde list,” Nikoloudis said. “It’s just a footnote in this overriding bid to hunt down tax cheats. Most importantly, though, the money which the Greek state stands to rake in from that list, in connection to fines on undeclared incomes, is peanuts compared to what can be collected from this roster of 80,000 individuals.” So far, Greek authorities have audited 4,500 individuals who are suspected of cheating on their taxes. The finance ministry hopes that by the end of June the Greek government may recover more than 3 billion euros in back taxes and fines. According to a Newsweek report, a recent study by the German Institute for Macroeconomic Research (IMK) and the Hans Böckler Foundation found that between 2008-2012, during the worst of Greece’s financial crisis, the tax burden on the poor increased by 337 percent while the burden on upper-income classes increased by only 9 percent. The country’s poor lost 86 percent of their income, while the rich lost between 17-20 percent. The economic crisis created more social inequalities as the financially weaker social groups, such as public sector employees and pensioners, shouldered the majority of taxes while the richest strata paid very little in taxes.
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Numbers alone can never interpret reality, not even a strictly financial one.
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Greece's Financial Crimes Squad (SDOE) is set to have greater powers to whack tax evaders with bigger penalties and incentives. The post SDOE On The Hunt For Tax Cheats appeared first on The National Herald.
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The new Greek government is preparing an overhaul of the tax system, starting with a Large Property Tax (LPT) that will include real estate, bank deposits, luxury goods, works of art, with a tax-free threshold of 300,000 euros, and the abolition of the Single Property Tax (ENFIA). The new tax system aims at increasing state revenues while being more fair and simple, and at the same time serve as an answer to criticism from European partners that the rich don’t pay taxes in Greece. The plan foresees an increase in the income tax-free threshold to 16,000 euros per year for households with two underage children and 19,000 for families with three children. For single taxpayers, the threshold will stand at 12,000 euros and increase depending on the number of children. A consumption tax is planned for luxury goods, such as expensive vehicles, boats, aircraft, helicopters, swimming pools etc. A number of tax exemptions will be granted, based on the taxpayer’s income. For example, there will be a tax discount of 20 percent on rent costs for those with an annual income of 15,000 euros or less, but not for those with an income of 80,000 euros. There will be a revision on tax exemptions, incentives and special tax statuses. There are currently 700 tax exemptions that reduce the annual budget by about 3.6 billion euros. Special consumption taxes will also go back to the drawing board. For the calculation of the LPT, all assets of the taxpayer will be added. This eliminates the single property tax that now applies to real estate only. It will apply to those with assets of 300,000 euros or more and will be separate from the income tax. For instance, an unemployed person may have inherited a large property or valuable artwork. They will have to pay LPT. There will be progressive tax brackets for the LPT and the target for annual revenues will amount to at least the European Union average in property taxation takings. The calculation of real estate value will be done yearly, based on real market values that will be updated annually. Regarding indirect taxation, there will be a decrease of value added tax on basic foods such as bread, milk, pasta, as well as on services such as renewable energy sources.
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Greek main opposition SYRIZA leader Alexis Tsipras gave an interview to the Sunday edition of “Ethnos” newspaper, in which he requested a “greater acquiescence for the country’s salvation,” not a “consent to complicity,” referring to what he described as a “national salvation government of more than one party.” Nevertheless, Tsipras still asked for an indisputable absolute parliamentary majority mandate from the people, while also noting that the Memorandum “finishes on January 25,” the day of the forthcoming Greek elections. He also said that there will be no more austerity and no more Troika, as the representatives of Greece’s creditors have come to be known. Tsipras emphasized that Greek Prime Minister Antonis Samaras’ commitments toward the Troika are also not included in Greece’s next day. The SYRIZA leader reiterated that if he becomes Prime Minister, his government will create a fairer tax system “that will, at last, touch the financially strong.” He said that the controversial unified property tax ENFIA shall be abolished and will be replaced by a large property tax that will be gradual. Tax-free income thresholds will also be raised, while “objective property value rates” – the ones which the State determines for all property transactions and taxing – shall be “widely adjusted.” Tsipras concluded that “the only ones who should fear are the ones who up until today are either tax-evading or tax-avoiding.” (source: ana-mpa)
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Property owners in Greece will not receive any income tax rebates due until the resolution of the new single property ownership tax (ENFIA) issue, which caused an uproar last week due to erroneous data having been used in the calculations. The Finance Min... ...
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In a continuous effort to fight tax evasion, Greece is adopting the US model as the State Legal Council has ruled in-house checks or checks in offices and businesses constitutional. Tax officers will have the authority to search for money or other valuables in the premises of the suspected tax evaders. Greek daily newspaper Ethnos reported that tax officers will now be able to proceed in investigations similar to the ones conducted by the IRS in the USA without the prosecutor’s presence. Furthermore, the State Legal Council has given the “green light” for tax investigators to confiscate money or other valuables. This ruling was voted with a marginal majority of 14 to 10 by the Plenary of the State Legal Council, after a relevant request from the Finance Ministry. After giving its own interpretation to the existing law, the Plenary came to the conclusion that “tax checks that are directly related to the collection of taxes and other state arrears are allowed without the presence of a judicial authority official, as long as there is a prosecutor order for the in-house check.” This measure will help the government collect taxes from tax evaders; a major issue the Finance Ministry is trying to tackle. The General Secretariat of Public Revenue recently presented a strategic plan for the 2014-2017 period that envisages actions aimed at boosting timely payment by taxpayers, reducing old tax debt and the size of black economy, combating tax-evasion, containing corruption and enhancing the skills of the tax administration workforce. The plan foresees the collection of 2 billion euros from old tax debt, 25% of new overdue tax debt, 30.9 billion euros in pre-return taxes by tax agencies and 12.1 billion euros in pre-return taxes by customs offices. The plan also foresees widespread tax controls of large enterprises and wealthy individuals, along with measures aimed to boost the efficiency of the tax administration, such as updating IT infrastructure, locating and combating corruption and promoting a code of ethics, improving methods of forced debt collection and the efficiency of tax controls. The Public Revenue office says it has completed 181 tax controls on wealthy individuals and businesses so far this year and has imposed fines totaling more than 45 million euros.
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Errors in the system that computes the new property tax (ENFIA) in Greece have caused chaos in the last few days as homeowners saw that they had to pay up to ten times more after the recent overhaul in the tax system. The Greek government has been trying to correct the errors, while admitting that officials had made serious mistakes in calculating the property tax. Greek Prime Minister Antonis Samaras decreed the value of real estate in order to be in line with the regulations that applied to the previous year. The government admitted that the problems were caused because many experienced officials of the Finance Ministry had been pensioned off. The Greek Finance Minister Gikas Hardouvelis admitted that the new regulations had initially been even harsher. “I took charge of this a month ago and corrected mistakes which you haven’t even seen, affecting almost two million people,” he told the Greek parliament. An announcement by coalition partner PASOK said: “Vice Ppresident and Foreign Minister Evangelos Venizelos exiting the Premier’s office announced that the payment of the first installment of the ENFIA property tax will be delayed by a month so that mistakes may be corrected and the necessary adjustments can be made without burdening and discomforting the citizens. It must be reminded that PASOK had formulated this proposal days ago.”
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The deadline for paying the first installment of a new unified Greek property tax bill has been pushed back a month to Sept. 29. The post Property Tax Deadline Extended appeared first on The National Herald.
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