Finance ministry sources said on Tuesday that “reduction of VAT gap could bring additional 2 billion euros annually.”
Speaking to state-run news agency amna, the finance ministry sources said that measures designed to combat tax evasion, which are currently in the implementation stage or have already been implemented, will lead to the discovery of undeclared incomes.
These measures include, among others, the linking of POS terminals with cash machines, pre-filled VAT and income statements based only on income/expenses recorded in the MyDATA system, expanding the use of POS terminals throughout the market and changes in the taxation of the self-employed.
The VAT gap in Greece was 23.4% in 2019, according to Commission figures, falling to 19.7% a year later and is estimated to be roughly 15% currently. Based on these calculations, this reduction by 8.4 percentage points offers an annual revenue of 2.5 billion euros, of which 2.0 billion is derived from VAT and 500 million from higher corporate tax income.
The finance ministry aims to bring this VAT gap down further, converging with the European average of 9%, which means an additional 2.0 billion euros in public revenue per year. amna noted.
The 2024 draft budget does not envisage any additional revenue from combatting tax evasion. VAT revenue is projected to total 24.2 billion euros in 2024 from 23.1 billion this year.
Based on the European Commission’s latest data, Greece was among the four EU member-states with the best performance in reducing VAT gap, after Hungary, Germany and Holland.
“Based on the European Commission’s latest data, Greece was among the four EU member-states with the best performance in reducing VAT gap, after Hungary, Germany and Holland.”
While reducing the VAT gap is laudable we need to be very careful before using such “change” comparisons to pat ourselves on the back. The countries with the worst performance are always those that can change the most. Recently the UK PM said that the UK had reduced its CO2 emissions much more than France. He forgot to mention that France started with a much lower level of CO2 emissions than the UK, because of their extensive use of nuclear energy, and that they were still emitting less per person than the UK.
Are the amounts of tax revenue calculated to due to tax fraud, tax evasion, tax avoidance etc trustworthy and reliable (with respect to those who expected to pay taxes)? Statistics on cheating is easy to accept, as Greece shares some third world characteristic that makes such activities more amateurish and visible.
So what is the fiscal gap? An estimate of the overall difference between the expected VAT revenue and the amount actually collected. The EU defines it as “an estimate of the VAT revenue loss due to tax fraud, tax evasion, tax avoidance and optimisation practices, bankruptcies, financial insolvencies, as well as miscalculations and administrative errors”. https://taxation-customs.ec.europa.eu/taxation-1/value-added-tax-vat/vat-gap_en (the graphic there, conveniently leaves out the item miscalculation.
What is this miscalculation item. How is this estimate of expected tax revenues derived? Doesn’t it depend on expected incomes. It also means the calculation depends on getting the Fiscal Multiplier, that the IMF got wrong on Greece. Simple example (from 2015) at https://redesigning-the-foot.blogspot.com/2015/02/petering-out-in-never-never-land.html (ignoring the Fiscal Multiplier is the same as assuming it is equal to one in the calculations)
Correction So what is the fiscal gap? Should read So what is the VAT gap?
I have an idea! Let’s introduce a Central Bank Digital Currency or CBDC that tracks every tranacrion the people make nad couple that to a Social Credit System. So if you’re not a good citizen and there is a gap between what you make and what you spend andxwhat is on your bankaccount, they’ll just cut you off from buying anything. Emit more CO2 then the size of your household would emit? No food for you, bad citizen.
There, there’s a good citizen in your 15 minute smart grid city.