ECONOMY

Tax exemptions deprive state budget of over 3.5 bln euros

Greece’s creditors insist on a further reduction of the 700 tax exemptions that remain in place, with the governor of the Bank of Greece voicing his support. The cost of tax exemptions to the Greek state comes to 3.6 billion euros, down from about 8 billion before the financial crisis.

The abolition of hundreds of tax exemptions in the last five years has added to the burden on taxpayers, as most of the exemptions concerned them. Tax discounts that supported households amounted to 3.5 billion euros in 2009 and concerned exemptions from the taxable income of insurance premiums and interest payments, as well as additional income amounts for more children etc. This sum has now shrunk to just 293 million euros.

The government, however, is not accepting at this stage the creditors’ recommendations for the abolition of the remaining exemptions, with the exception of those concerning value-added tax (VAT) and the special status enjoyed by various economic sectors and geographical areas, provided there will be similar procedures started for all eurozone members.

According to Finance Ministry data, there were 980 tax exemptions in 2009 that accounted for about 8 billion euros. Meanwhile, the 700 exemptions left today cost the state some 3.6 billion euros.

The exemptions that still apply are the following: 117 concern taxpayers’ income tax, 98 are in corporate income tax, 81 are VAT exemptions, 32 concern ship tax exemptions, 22 regard the single property tax, 36 are for taxes on inheritance etc, 29 regard the property transfer tax, 15 concern the capital concentration tax, 70 are about the tax stamp and 42 refer to consumption taxes.

The cost of exemptions to the special consumption taxes amount to an estimated 1.046 billion euros, more than half of which (578.57 million euros) concerns the loss of state revenues from exemptions and discounts in energy commodities such as fuel products, natural gas and electricity. Tax discounts on the consumption of alcoholic drinks amount to 465.8 million euros.