New effort to collect 6 bln in unpaid taxes

The Ministry of Economy and Finance has high hopes of putting some 6 billion euros into state coffers by persuading taxpayers to repay sums owed to the Tax Service. Deputy Finance Minister Apostolos Fotiadis is preparing a new schedule of repayments, much more favorable to taxpayers than the previous one, with more installment periods and a smaller minimum amount paid each month. Under the previous repayment scheme, those who missed over three installment payments in a row were excluded from the benefit repayments and were obliged to repay their debt much sooner and under less favorable terms – with the result that many people simply stopped paying. The total debt owed to the tax authorities is about 9 billion euros. Some of it is owed by public utilities and some, owed by private taxpayers and corporations, is deemed as non-recoverable. In order to make corporations pay, the ministry had devised a procedure whereby businesses were supposed to pay taxes on non-declared income from 1993 to 1998. The companies were to declare this voluntarily or face tough inspections from the tax authorities. About six months ago, the ministry suddenly stopped pressuring companies to pay back taxes. Apparently, this was a move designed to delay the payment schedule in order that revenues now be entered into the 2003 budget. Next year’s budget will be crucial to the government’s efforts to begin reducing total debt substantially. After it was obliged by Eurostat, the European Union’s statistics agency, to include in the budget spending items such as share-convertible bonds and bonds issued in exchange for future receipts, the country’s debt for 2001 went up to 107.1 of gross domestic product (GDP), the third highest in the EU after Belgium and Italy. The government has now committed to reducing the debt to 100 percent of GDP by the end of 2003, and is under heavy pressure by the European Commission to do so. The Commission has targeted Greece and Italy as countries which failed to reduce their debt level significantly over the past four years, engaging instead in a series of fiscal operations that amounted to cooking the books. Now Greece, as well as Italy, will face strict deadlines, and possible sanctions, if it fails to reduce its debt by about 4 percentage points of GDP each year. This, at least, is the Commission’s proposal, unveiled by Finance Commissioner Pedro Solbes last Wednesday.

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