ECONOMY

Finance Ministry officials worried over revenue goal

Officials at the Ministry of Economy and Finance are worried that the government’s target, stated in the 2004 budget, to raise revenue equal to 2.631 billion euros, may be too ambitious and difficult to achieve. Already, during the first 20 months of the year, tax offices have told the ministry that revenue collection is lagging behind last year’s pace and that January figures will clearly show that lag. Ministry officials are privately saying, «Matching the 2003 figure will be a success.» Officials from opposition New Democracy, which is still leading the ruling Panhellenic Socialist Movement (PASOK) in opinion polls a month and a half ahead of the March 7 elections, also expressed concern at how their party will cope in case it forms a government. One solution, although it does not appear very likely, is to submit a supplementary budget, effectively revising the present government’s 2004 budget. The other is to acknowledge the goal and try to achieve it by using the tried-and-trusted method of settlement, which brings money into state coffers, although not all the amount owed by the taxpayers. Traditional sources This method involves the threat of a thorough examination of company books for previous years. Since such an examination almost always yields evidence of tax evasion, enterprises are encouraged to settle for a payment to the tax authorities or risk the auditing and a fine, possibly heavier than the settlement itself. Economy and Finance Minister Nikos Christodoulakis and his deputies acknowledge that traditional sources of revenue such as the value-added tax (VAT) and income tax on legal entities are not sufficient to reach the revenue target for 2004 and are searching for solutions that will not incur the taxpayers’ wrath, an extremely dangerous sentiment on the eve of an election. They also acknowledge that successive waves of settlements combined with the sluggishness of the market have dried up companies’ reserves. As a result, auditing drives by tax officials are less and less frequent, with few more expected ahead of the election. An exception concerns companies with turnover greater than 220,000 euros whose books for the period 1993-98 are coming under scrutiny.