Tax payment by credit card sends usage soaring

Income tax payment via credit card shot up in August as a large portion of credit card holders in Greece chose this way of payment instead of seven installments in cash or by bank check at the tax office that the state has allowed for.

According to bank data, tax payments by credit card came to 200 million euros, representing between 40 and 50 percent of total credit card turnover in August. This constitutes a massive increase in the use of credit cards, whose use had been severely dented as a result of the economic crisis.

However the above trend is now being reversed, to the extent that the benefits to be reaped from the use of credit cards for paying tax debts are multiple compared with the arrangement for seven installments in the form of cash or bank check by next February that the state offers. Credit card payments can be stretched over up to 12 months because banks that issue credit cards allow for the spreading of each installment, thereby allowing for smaller amounts to be paid every month.

As a result, if a taxpayer owes 3,000 euros in taxes, he is not only allowed to break down the payment into seven, nine or 12 installments, depending on the bank, but can also reduce further the amount he would pay every month — i.e. instead of 428 euros per month in seven equal installments, he could pay 12 installments of 250 euros each.

What is more, taxpayers who choose to pay the entire income tax bill by credit card and then pay the bank in installments will also benefit from a 1.5 percent discount the state offers for tax payment in a lump sum, a benefit that taxpayers using the state?s arrangement for seven installments in cash or by check at the tax office miss out on. Consequently, in the above example, the taxpayer with a debt of 3,000 euros can also save a total of 45 euros that way.

This means that the use of credit cards for the payment of tax debts is expected to increase further in the coming months, as this fall will be a period when additional tax burdens will weigh on taxpayers, concerning the special tax on properties paid through electricity bills and the road tax for vehicles.

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