ECONOMY

Expired debts rise and are likely to expand further by year-end

expired-debts-rise-and-are-likely-to-expand-further-by-year-end

Expired debts to the state created since the beginning of 2015 had climbed to 6.9 billion euros by the end of last month, an amount likely to grow dramatically over the remainder of the year due to the multiple taxes that have to be paid in the last quarter, exceeding 8 billion euros.

It is also quite possible that quite a few people who had entered the 100-installment payment scheme will abandon it due to an upcoming hike in interest rates and the introduction of new criteria (based on incomes and properties), thereby further expanding the sum of expired debts.

According to data released on Monday by the Finance Ministry, expired debts to the state grew by 645 million euros last month, taking the sum of the first eight months of 2015 to 6.9 billion euros. Add this to the sum of previous years and you have a total of almost 80 billion euros that the Greek state is owed.

The tax administration will need to activate the measures securing the state’s rights immediately. It must apply the automatic system of confiscations concerning those who owe more than 70,000 euros, while the ceiling of 25 percent on salary and pension confiscations no longer applies as it has been abolished by the new bailout agreement. The amount of bank deposits protected from confiscation has also been reduced from 1,500 to 1,000 euros.

In the next few days the ministry will issue a decision regarding interest rate increases in the 100-installment payment scheme, by up to 5 percentage points. To date there had been no interest on debts up to 5,000 euros. Additionally, a number of debtors will be asked to pay off their dues in significantly fewer tranches than they had originally planned for, owing to income and property criteria that the General Secretariat for Public Revenues will impose.

The taxes due up until the end of the year include income tax installments (about 3 billion euros), the single property tax, known as ENFIA (some 2.65 billion to February 2016), the luxury tax, the road tax for vehicles, and the advance payment for next year’s income tax, which as of this year will be twice as high (from 27 percent to 55 percent).