IMF proposes tax offices take over social security contributions collection

A report compiled by four International Monetary Fund officials proposes that the Greek government incorporate the vast majority of social security contributions into regular taxation, freeing social insurance funds from the responsibility of collecting such dues.

In a paper seen by Sunday’s Kathimerini, the IMF proposes that Greece’s main social security fund, IKA, only have to collect contributions which are overdue by at least six months and amount to more than 5,000 euros.

The proposal to change the way social security contributions are collected is seen as vital to ensuring the sustainability of Greece’s social insurance system, which has seen taxpayers’ debts soar 240 percent over the last six years.

IKA, which accounts for 61 percent of total contributions, was owed a total of 11.7 billion euros at the end of last year.

Greek governments have created 52 different schemes aimed at collecting overdue social security contributions since 2002. But the IMF inspectors found that despite the favorable repayment terms included in these schemes, 35 percent of debtors do not abide by the agreements. In fact, the Fund estimates that 92 percent of the contributions owed to IKA are more than 12 months old and are unlikely to be collected.

Under the IMF’s proposal, the government would pass legislation this year for the transfer of the collection responsibilities to the central tax administration with a view to the system being phased in by 2017.

This is just one of several items up for discussion between the coalition and troika inspectors due in Athens on Monday to begin their assessment of Greece’s progress in meeting fiscal and reform targets.

Other agenda-topping issues are privatizations, with it looking unlikely that Athens will meet the target of bringing in 2.5 billion euros from sell-offs this year. Reductions in the number of civil servants, an overhaul of the tax system and the possible reduction of VAT in the catering sector will also be up for discussion.

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