ECONOMY

A simple, fair and alluring tax system

Simplification, incentives for work and investment, and fairness will be the three main axes of the planned tax reform, Economy and Finance Minister Nikos Christodoulakis said yesterday. «Simplifying the system will facilitate taxpayers and attract investment, while incentives will promote development. We also need to do away with the discriminatory treatment that exists between different income brackets,» he said at a two-day seminar of public tax workers. Christodoulakis said that significant cross-border movements of capital have made the simplification of tax systems a prominent trend in all European Union countries. «Working people, investors and businessmen can compare tax systems and will prefer the simplest ones.» He specified that the changes will not just be based on a readjustment of tax rates. Earlier, Professor Theodoros Georgakopoulos, chairman of the committee that in March produced a comprehensive report on tax reform that met with widespread criticism, including senior members of the ruling PASOK party, said, «I grade journalists with zero and politicians with a minus grade,» for their response. He insisted his proposals could not have been more generous, particularly as regards increasing the lowest, tax-free income bracket by 2,100 euros. However, he said that conditions were not yet ripe for the proposals that would introduce a possession tax on real estate – replacing a number of existing levies – and transfer resources to local government, but he said that value added tax should be introduced on transactions of property items. He also defended the abolition of all tax breaks on the grounds that they work in a regressive fashion. Dimitris Batzelis, special secretary to the Financial Crimes Squad, detailed seven measures which the Finance Ministry is examining for countering tax evasion through offshore companies (OFCs). These are: First, the imposition of an annual property ownership tax; second, mandatory bookkeeping by all companies acquiring real estate; third, the naming of a representative by all OFCs engaged in stock market transactions in Greece – an estimated 3,000 – who would be responsible for any tax law violations; fourth, taxing money which such companies receive from persons or other companies and then buy shares; fifth, non-admission of purchase receipts issued by OFCs toward depreciation of fixed assets of enterprises, sixth, non-admission of expenses of enterprises if receipts are issued by OFCs, and, finally, non-admission of receipts issued by OFCs for obtaining investment subsidies.