Confusion on new tax plans

Confusion on new tax plans

The government appears to be in total confusion over finding measures needed to offset the revenues hole that would be created by not implementing a 23 percent value-added tax on tuition. Without any planning or calculations, it is simply throwing out proposals not knowing whether they can be implemented (given the various contracts in force) or even if they would suffice to compensate for the abolition of the VAT on education.

Such was the case on Thursday as government sources spoke of a plan to increase the tax on games of chance such as Kino, Joker and Lotto, stressing there would be no legal issue, only for a Finance Ministry press release just a few hours later to refute report of a tax hike on gambling saying they were out of touch with reality.

The government has been looking for measures to offset the loss of the VAT on tuition since it came to power in September, and proposals have included a hike in the VAT on veal, taxing hunting, a reduced two-rate VAT on education (which the European Commission has rejected), and even the introduction of VAT exemptions for parents who pay both for schools and private tuition.

The government’s moves point to panic and an inability to form a tax policy. For the government to avoid implementing the VAT on tuition, it must find alternatives worth 500 million euros per annum.

A government official claimed that taxing Kino is the likeliest measure and that it could fetch 205 million euros per year, while OPAP, which hosts the game, counters that the revenues would come to just 52.4 million.

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