BUSINESS

Tax hikes and card use helped primary surplus exceed its target

PROKOPIS HATZINIKOLAOU

TAGS: Finance

Excessive taxation and taxpayers’ increased use of plastic money in their payments to the state led to the creation of a primary budget surplus of almost 4.4 billion euros in 2016, according to provisional end-of-year figures released on Tuesday by the Finance Ministry.

The taxes imposed in 2016, amounting to some 5 billion euros, sent budget revenues soaring last year as they exceeded the target set by 1.8 billion euros.

Increased value-added tax rates, the abolition of the VAT discount of 30 percent for a number of Aegean islands, new income tax rates, the solidarity levy hike, and the increase in the special consumption tax on cigarettes and heating oil are just a few of the taxes that burdened Greeks last year and raised state takings.

On the negative side of the 2016 budget was the Public Investment Program’s 500-million-euro drop in spending, as well as the 204-million-euro reduction in its inflows from the European Union.

The phenomenon of overtaxation continues even stronger in 2017, with new taxes amounting to 2.5 billion euros. Finance Ministry officials note that the current momentum in revenues may suffer over the course of the year, as the increased taxes and social security contributions taxpayers have to cover may well create problems such as an increase in tax and contribution evasion.

The same sources add that the volume of expired debts to the state will grow by about 15 billion euros this year. The latest available data show that more than half of all taxpayers have debts to the state that add up to about 94 billion euros.

The provisional data for 2016 show the primary surplus amounting to 4.39 billion euros, against 2.27 percent in 2015 and a 2016 target of 1.98 billion. In December revenues reached 6.026 billion euros, beating their target by 114 million.

For the whole of 2016, budget revenues amounted to 49.8 billion euros, up 1.8 billion from their target, with tax returns reaching 3.26 billion, while state expenditure came to 55.15 billion, missing the annual target by 817 million euros.

Online