Gov’t VAT hikes lacked good planning
The government has increased the value-added tax rate from 13 to 23 percent on some 100 categories of products and services with the aim of raising an additional 2.4 billion euros in revenues over the next 18 months. It has done so with neither a concrete idea of the turnover of each category nor the possible impact on revenues from a major decline in consumption while the country sinks back into recession.
The country has no reliable statistics to show the amount of VAT revenues the state collects from each product or service. Therefore, the only clear picture the Finance Ministry has is regarding the VAT paid by the sectors of hotel accommodation and restaurants.
After the apparently arbitrary drafting of the list of goods shifting from the 13 to the 23 percent category – although one presumes it must have been conducted through some quality criteria – no one can quite assess the likely result of the changes, to say nothing of the complete lack of preparations for dealing with the increasing threat of tax evasion as is always the case after a tax hike.
None of the reforms announced in previous months, ranging from receipt lotteries to obligatory transactions via credit cards and wired-up cleaners and students who would report tax evaders, ever materialized, and the tax monitoring mechanism remains sorely understaffed.
