Upd2: Greece’s Taxation Nightmare – Venizelos Part II

After the uproar triggered by the announcement of receipts collection, Finance Minister E. Venizelos issued a clarifying statement… triggering an even bigger uproar! For two simple reasons, hmmm… in fact three: 1) the state will electronically survey even citizens’ savings 2) the plan hasn’t been thoroughly worked out 3) more clarifications are needed.

He let know that in the receipts also those for some utilities like gas, electricity, rent, tuition fees, mobile phones etc will be accepted. Currently they are not!

And further that any income that is not spent but saved in bank deposits, securities, real estate etc should also be declared. Apparently the professor for Constitution law does not know what a Finance Minister most probably would: that under the current law bank deposits interest rates are taxed with 10%, that real estate purchases are taxed too.

Venizelos slammed the media saying in the statement: “It is interesting that the intention announcement of the Ministry of Finance to capture with simple and practical moves tax evasion and limit black-economy, instead of finding the encouragement of the media, caused number of early reactions.  With these rules we will restore the brutal injustice that exists against the employees and e low-pensioners”

What Venizelos failed to clarify is

1) How the tax payers turn their ‘paper receipts’ into ‘elecctronic’ ones, since the smart card has not been in circulation yet.

2) How the taxpayers who are obliged to pay solidarity contribution, trade levy and extra property levy within the next 3 months , will manage to double their receipts amount in order to reach the required documented expenses until the end of the year.  Currently 25% of the income has to be documented in receipts. This will change into 50-60%.

3)Where will the people find the money to satisfy the government’s commitments to Greece’s lenders.

Not to mention the redeeming purpose of taxes or that there will be no tax refund – or when just 300 max 400 euro –from the receipt collection.

An example: The minimum yearly  income to be taxed has been recently lowered from €8,000 down to €5,000 gross. With current 25%, the taxpayer has to document receipts worth 1,250 euro. The income is taxed with 10%. If the taxpayer has receipts of only 1,300 and the law requites 50% (2,500 euro), the difference 2,500-1,300 = 1,200 not spent will be “punished” with another 10% tax!

That’s an obvious ‘hidden’ tax in times of deflation. Satanic, isn’t ?

The tax scale rises up to 45% for incomes up to 60,000 euro. From there onwards things are getting … relaxed again. As usual the targets of the finance ministry are the low or medium incomes of employees and pensioners who can not either hide taxes nor pay more. At the same time the big scale evaders keep their incomes safe in off-shores or in Swiss banks.

The new taxation system is scheduled to be released sometime in October.

UPDATE  In a statement issued at 7.30 pm, the fourth in a single day, the FinMin said, the new receipts collection will be valid as of 01.01. 2012 and not retrospective from 01.01.2011. Finally the Greek Einsteins understood that th eplan is not possible! Why don’t they adopt the German system? it’s clear and simple, even for officials at the Greek finance ministry. 

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