The use of taxpayers’ assets as evidence of their living standards – known in Greek as “tekmiria” – is to be gradually phased out, starting next year, with the aim of abolishing by 2022, the government announced on Wednesday, with an alternative system of cross-checking replacing it soon.
The tekmiria system was first introduced in 1978 and was meant to determine whether a taxpayer’s living standard, based on assets such as real estate, vehicles, swimming pools etc, was justified by their declared income.
To combat tax evasion, which remains rampant in Greece, the government will instead activate indirect monitoring techniques combined with the probing of the online transactions taxpayers make every year. This way the Finance Ministry expects to identify taxpayers who spend more than what they say they earn, while being in possession of expensive properties.
Government spokesman Stelios Petsas told Skai TV on Wednesday that “in the Income Tax Code to be submitted to Parliament in the next few days, there will be a provision about the gradual abolition of tekmiria. We are promoting indirect checking techniques in combination with electronic transactions.”
Petsas added that “when the objective criterion is eliminated, we will have to see whether the incomes [declared] match the actual ones. We are reducing tax rates to offer an incentive to citizens to declare their real incomes.”
Last year the tekmiria checking system identified 1.9 million taxpayers whose assets were not justified by their incomes. They were therefore taxed for an extra combined income of 6.7 billion euros, but the income tax they actually paid did not even reach 150 million euros. Most of the taxpayers asked to pay extra tax through the tekmiria system were salary workers, followed by pensioners and entrepreneurs.
The tekmiria system has not been adjusted since 2010, so households with expensive assets may have seen their annual incomes plummet while struggling to maintain their property in the context of the financial crisis.