Greek draft budget for 2017 to detail forthcoming 'tax tsunami' in the country

Monday, 03 October 2016 10:05
UPD:10:07
EUROKINISSI/ΜΠΟΛΑΡΗ ΤΑΤΙΑΝΑ

By G. Kouros

Ever-increasing taxes of all kinds are in store for some six million taxpayers in Greece, with a new round of tax hikes as of Jan. 1, 2017, the result of measures announced in relation to last spring’s utterly delayed first review of the Greek program (third bailout).

The upcoming round of tax increases reach 2.5 billion euros in expected revenues, bringing the total value of expected taxes imposed by the Greek state in 2017 to nearly 48 billion euros. Successive tax increases, both direct and indirect, are cited as one reason for the continuing cycle of recession, unemployment and malaise in the crisis-battered country, given that disposal income held by individuals, households and businesses has either evaporated or remains hoarded for “better days.”

One ominous sign is the fact that arrears to the state now exceed 91.5 billion euros, although a significant chunk of that figure are debts from past years and even decades, often by corporate entities and businesses that no longer operate and by individual taxpayers with no assets to their name or even deceased.  

The exact breadth of the coming “tax tsunami” will be measured this week, as the draft 2017 will be tabled in Parliament on Monday. As expected, the leftist Greek government will include all of the commitments it signed in the third memorandum with institutional creditors.

New tax increases for 2017 will reach 4.3 billion euros, of which 1.4 billion euros are expected to come from reforms (downwards) in the social security system; 1.4 billion euros from higher rates on income taxes and 1.5 billion euros from increases in indirect taxes and fees, particularly an increase in the VAT rate and a higher special consumption surcharge on fuels.

In terms of direct taxes, the first measure will lower the tax-free annual income ceiling to between 8,636 euros and 9,090 euros for wage earners and pensioners, slashed from the higher – by European standards – ceiling of 9,545 euros.

Beginning on Jan. 1, discounts on VAT rates for most islands will be abolished, meaning that the 12-percent and 24-percent rates will come into effect throughout the Aegean.

Hikes in the fuel surcharges translate into a 3-cent increase per liter on gasoline; 8 cents for diesel and nearly 10 cent per liter for LG.

The once ubiquitous Greek “café scene” of groups of people sipping coffee, smoking and chatting will be more expensive in 2017 as well. A higher tax on tobacco products will mean between 50 cents and one euro tacked on to a pack of cigarettes, with specific tax hikes slapped on coffee imports translating into between 10 and 20 percent higher retail prices for all types of coffee.

Not even “e-cigarettes” are immune from the “tax man’s” reach, with a 10-cent per ml of liquid planned, but as of July 1, 2017.

For anyone with a cell phone or a land line connection, a “special” tax will mean an extra 6 percent on top of each bill.

On the business side, the coming “tax raid” will mean even higher tax rates on profits, with the current 26 percent rate reaching "Scandinavian" levels to stand at 29 percent for companies posting annual profits of more than 50K.

Even more painful is a demand for pre-payment of 100 percent of “expected” profits for the coming year, while social security contributions by employers for their employees will now be calculated on net profits, beginning from 2016’s results.

Finally, whatever dividends are still paid out by companies to shareholders amid a seventh year of economic implosion will see a commensurate tax rate rise to 15 percent from 10 percent.

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