Businesses rise against paying more tax upfront

The government’s sudden decision to ask enterprises to pay a greater share of their corporate taxes upfront will create many problems, Drakoulis Foundoukakos, president of the Athens Chamber of Commerce and Industry (EVEA), said. The amendment presented on Monday night, which raises the percentage of corporate tax that must be paid in advance of the submission of income statements to 65 percent for most businesses (up from 55 percent) and 80 percent for banks (up from 60 percent) «goes against one of the government’s main policy commitments, that is, to create a stable business environment and to avoid surprising businesses with sudden changes,» Foundoukakos said, adding that this creates a crisis of confidence in the business world. The government adopted this measure in order to enhance its revenues early in the year. Once again, it faces a lag in revenue which threatens to render its ambitious revenue raising target, 11 percent over the previous year, meaningless. The same situation emerged last year, with the government forced to revise its 11.4 percent revenue growth target to a less-than-expected 5.2 percent so as to present the final, 6.4 percent rise as a success. «If, every time that fiscal difficulties manifest themselves, the first victims are the enterprises that produce, create and compete, then the Greek economy’s prospects will continue to be murky and uncertain… the current (conservative) government is repeating the previous (Socialist) government’s mistake,» Foundoukakos said. The government considered that the continued extensive tax evasion is to blame for its failure to achieve the revenue growth targets set in the budget. In fact, government data showed that tax evasion may be spreading. In 2004, 29 percent of inspected businesses showed to have committed at least one significant tax violation. This number rose to 42.3 percent in 2005, according to data provided yesterday by the Finance Ministry’s Special Inspections Service (SIS). The problem is more acute in the construction and transport sectors, travel agencies, hotels, restaurants and other services firms. The Peloponnese takes the prize in tax dodging, with 61 percent of inspected businesses based there in 2005 found guilty of tax code violations. SIS plans to increase its inspections in 2006 to 70,000, up from 46,150 in 2005.

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