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Economy

Greeks Lining Up to Pay State Debts in 10-Year Installments

February 21, 2020

ATHENS – Those Greeks who pay taxes – many do all they can to avoid it or lessen what they owe – are taking advantage of a scheme giving them up to 10 years to make a settlement after being hammered by austerity measures during an economic crisis.

That has seen them lining up in state tax offices to try to get rid of what they owe over installments after many couldn’t pay after being hit with big pay cuts, tax hikes, slashed pensioners and worker firings over the previous decade.

According to data by the Parliamentary Budget Office, the numbers of payments made by the end of 2019 amounted to 6.1 percent of those due, or 6.5 billion euros ($6.92 billion) compared 3.5 percent owing 3.6 million euros ($3.89 billion) a year earlier.

Before the term was extended to 120 months, it was only 12 months, or one year, which meant most debtors couldn’t meet the requirements that would have taken most or all of their monthly salaries over that period.

In October, 2019 – three months after New Democracy ousted the former ruling Radical Left SYRIZA – the Conservatives said their bid to lessen the tax burden after cutting the corporate rate from 29 to 24 percent was being thwarted by high rates set by their rivals.

The International Tax Competitiveness Index by the US-based Tax Foundation placed Greece 30th among the 36 member-states of the Organization for Economic Cooperation and Development, a Paris-based group, said Kathimerini.

Since 2014 – when a previous New Democracy government was ruling – and through the 4 ½ years of SYRIZA’s reign, Greece has been stuck between 27th and 32d place in the index which was first published that year.

Greece ranks 29th in corporate taxation and 28th in property taxes, with New Democracy also planning to cut the hated ENFIA property tax surcharge that SYRIZA kept after then-Premier Alexis Tsipras said he would eliminate it.

The Tax Foundation’s analysts note that many property taxes tend to be highly distorting and complicate taxpayers’ lives and doing business, another obstacle, as excepting land taxation, most asset taxes increase economic distortions and bring about long-term negative effects on the economy and its productivity.

In August, Finance Minister Christos Staikouras told The Financial Times that tax reforms are his “key priority,” to accelerate a slow recovery from a 9-½-year-long economic crisis a year after the end of 326 billion euros ($362.03 billion) in three bailouts.

He said the government is planning “a comprehensive tax reform that will have a four-year horizon and will accelerate growth,” that will focus also on cutting income taxes and the Value Added Tax (VAT) providing tax incentives for investors and ending the hated ENFIA property tax surcharge demanded by the country’s lenders.

“The fundamental objective is to achieve sustainable high growth rates so as to gradually restore the country’s lost wealth,” Staikouras told the site.

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