New plan for settling social security arrears?

New plan for settling social security arrears?

The Labor Ministry will attempt to convince Greece’s lenders, when talks resume in September, that a new system offering individuals and companies who owe social security contributions the chance to pay their debts in installments is needed. Top officials at the ministry have been forced in this direction by the sharp rise in outstanding contributions.

Such a discussion with the institutions will likely prove particularly difficult because they have already made it clear that they expect the government to get tougher on debtors from next year. For example, as of January 1, anyone who has registered for the scheme that provides for payments to be made in up to 100 installments will be deemed to be in arrears if payment is late by even one day.

The government, on the other hand, is hoping to find a way to convince individuals and companies that have so far not signed up for the payment scheme but who still owe contributions to do so. Ministry officials are concerned that despite pensions cuts and increases in contributions, social security funds still face shortfalls.

According to data compiled by the Center for the Collection of Social Security Arrears (KEAO), the amount of overdue contributions that it has verified comes to 16.6 billion euros. Its data also shows that most of those who registered for the payment scheme have been unable to keep up with their installments. A total of 147,308 signed up for the program but only 50,249 are still paying, while just 8,842 have been completed successfully.

The last few months have proved particularly damaging for the program. Just over 36,000 debtors dropped out of the payment scheme between April and June.

The one bright spot for the government, which it hopes will strengthen its case in the talks with Greece’s lenders, is that after missing the deadline for the 100-installment scheme, some 3,500 debtors have joined another program that allows them to settle their dues in 12 monthly payments.

As of 2017 there will be a single system for collecting taxes and contributions and the government may use this as a platform for proposing a new scheme for arrears based on each taxpayer’s ability to meet his or her debts.

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