Tax exemptions have soared
They now amount to some 28% of tax revenue and central banker is calling for their review
Tax exemptions increased to 15.5 billion euros this year from €12.88 billion in the previous year, according to details on tax expenditures submitted to Parliament together with the budget.
In fact, the number of tax exemptions has registered a continuous increase: They number 1,064, from 1,047 in 2022. Three years ago, in 2021, they amounted to 987 and cost €8.9 billion, while in 2016 they stood at 716, amounting to €3.041 billion. Tax exemptions were inflated during the pandemic through the refundable advance payment and other means of state support to companies and individuals.
The €2.6 billion increase in the tax break bill in one year is largely due to the adjustment of property values as well as the increase in the tax-free limit for stocks, donations and parental benefits up to €800,000. The adjustment of the objectives led to higher valuations of the properties exempted from the special tax on property (EFA). That is, until 2021 the cost of the exemption from the EFA was €3.7 billion, and with the adjustment of objective values it amounted to €5.3 billion.
Notably, some 20 days ago central banker Yannis Stournaras recommended that the government review the tax exemptions, which is not currently in the planning.
Based on figures from Finance Ministry, tax exemptions amount to 28% of tax revenue, while in some cases deductions cannot be counted, such as inheritances and gambling winnings, since they are not computerized, which means that the cost is much higher and unquantifiable. Losses from VAT are also not recorded, as the exemptions of professions from the tax cannot be measured. The cost of exemptions within the country is difficult to determine, since exempt businesses do not submit VAT returns.
The above data and the fact that almost seven in 10 taxpayers declare incomes that do not exceed €10,000 demonstrate that not only is taxable material hidden, but also that exemptions and allowances are also directed to those groups that avoid declaring their real incomes.
