Adjustment of debts in cards to boost poor tax revenues
The government is considering the adjustment of debts to the tax authorities in order to tackle the acute fiscal problem that has been worsening due to the economic crisis. At the same time, Economy and Finance Minister Giorgos Alogoskoufis has categorically ruled out any conclusion of outstanding tax cases, as companies have requested. For the following year, likely to be the toughest one for the economy, Alogoskoufis has been extremely wary of proposals for raising value-added tax (VAT) rates, although he has stopped short of ruling that out. Yet at the same time he has been planning other measures that are intended to bolster revenues, along with extensive cross-checking to locate those who have not declared their real estate properties so as not to pay the single property tax (SPT) to the Public Power Corporation. Even the most optimistic estimates about the effect of revenues from SPT and the single tax on diesel and heating oil do not see revenues reaching the budget target by the end of the year; the main reasons are the global economic crisis, the drop in consumption and the problematic tax revenue mechanism. In order for the deficit to come in as close as possible to the target (although it will be certainly higher than 2 percent), the government’s attention is focused on revenues. Apart from the usual cross-checking measures and the raids by Special Inspections Service (YPEE) agents on holiday destinations, repeated each year with moderate effect, Alogoskoufis has ordered his ministry’s agencies to prepare a debt-adjustment plan. Depending on the course of revenues, he will decide by the end of August whether to put it into practice. These debts amount to a total of 15 billion euros and to a great extent were processed from the time they were turned into securities. Therefore, the ministry has a rather good picture of which debts can be paid. «If there is an adjustment, it will be strict and not lenient. There will be terms and conditions that will avoid a repeat of the phenomenon where someone pays an instalment and then disappears,» said the minister. The ministry will also begin an advertising campaign against tax evasion, while this week the ministry’s relevant committee will convene to announce measures against the illegal trade in shipping fuel. For next year, when the international crisis is likely to continue, with economic growth to shrink further and oil and food prices to rise higher, the fiscal challenges will be even greater given the problems seen this year. This is when the ministry intends to introduce a new tax measure under the general title of «taxing wealth.» This will include taxing the capital gains of stock and stock options, a revision of the SPT etc. An increase in VAT will be the ultimate measure to which the ministry will resort to boost the 2009 revenues, as there is no chance of that this year. «The most likely scenario now is that this is not included in plans for next year’s budget,» a top ministry official said. He agreed that an increase in the high rate (19 percent) along with a decrease in the lower (9 percent) would show social sensitivity, but said that the impact on inflation and the political cost would be too much.
