While there have been some glimmers of hope for the Greek economy in recent days – namely the successful share capital increases of Alpha Bank and Piraeus Bank – it is proving impossible for many citizens and businesses to meet their obligations of the state with outstanding debts to the government reaching 962 million euros for January alone. Of this the state only collected 61 million euros, while from the over 60 billion in accumulated ‘old’ debts the state managed to collect 205 million euros.
By the end of 2013 the total accumulated outstanding debts to the state reportedly stood at a record 62.303 billion euros (link in Greek).
According to data from the Ministry of Finance, outstanding taxpayer debt chiefly arose due to unpaid fines for outstanding taxes, non-payment of VAT by businesses and freelance workers followed by unpaid property and income taxes.
As part of its efforts for fiscal consolidation the government has levied new property taxes which citizens are often unable to cover. Many owners are unable to meet their tax obligations even in the event that they attempt to sell or rent properties as the real-estate market has effectively collapsed with demand at historic lows.
Furthermore those already with outstanding debts now face increasingly stringent fines. Specifically according to measures which went into effect on the 1st of January 2014, from the first day a payment is delayed, interest is levied on the amount owed at a rate of 0.73% per month or 8.76% per month. Additionally if the amount remains unpaid for 2 months, an additional fine of 10% of the amount owed is levied. If taxes remain unpaid for over a year, the fine is increased to 20% and again to 30% after an additional 12 months (from Kathimerini – link in Greek).
Given that many of those who owe unpaid taxes or fines simply cannot afford to pay many of these additional fines remain uncollected. Indicative are the results of 57 tax audits conducted in January of self employed ‘wealthy’ taxpayers – ie those with property with an ‘objective value’ (a value estimated by the state usually based on pre-crisis data) of over 2 million, or an assumed annual income of over 150,000 euros. These resulted in the levy of an additional 16.5 million euros in fines and taxes of which the state has only collected 2.6 million euros, or 15.7%.
Furthermore in January a mere 9 audits of large businesses were completed (of a total of 988 in progress), while a further 5 were referred to the courts. The additional taxes and fines on businesses came to 128.97 million euros while the revenue collected came to only 10.91 million euros or 8.46%.