Greek Surtax Doubles, Tax Inspectors Set to Strike

ATHENS – A relentless wave of tax increases hasn’t provided enough revenue to plug a deep hole in public finances, so a new supposed one-time “solidarity” surtax on income paid by Greeks will continue next year – and double – as it will have to be paid twice. An amendment drawn up by the Finance Ministry is due to be submitted to Parliament Oct. 14th, will require taxpayers having to pay between 1 and 4 percent tax on their income on top of regular income tax and other charges. And now they will pay the tax, one lot for their 2011 incomes and the other for earnings in 2012.
The tax on next year’s income will be added to the amounts that are withheld by employers but the tax on 2011 earnings will be paid in one lump sum as soon as people receive their statements from the tax office. Finance Minister Evangelos Venizelos attempted to play down the impact of the tax, suggesting that it would not lead to any extra burden on households but was just a “technical” adjustment, the newspaper Kathimerini reported, which said initial calculations suggest the finance minister is wrong. Someone earning 25,000 euros a year, or 1,785 euros a month, currently has 231 euros in tax withheld by their employer. This will increase to 294 euros per month.
The tax is on a sliding scale, so those earning between 12,000 and 20,000 euros per year are taxed at 1 percent, those on 20,000 to 50,000 at 2 percent, those who make 50,000 to 100,000 at 3 percent and anyone on more than 100,000 euros a year at 4 percent. Self-employed professionals and farmers will only pay the solidarity tax for 2011 next year. They will pay the amount for 2012 in 2013.
Greeks are being besieged to pay more taxes, including a new “emergency” property tax being put into electric bills with the threat of having power turned off if they don’t pay but the government has done virtually nothing to go after tax evaders costing the country $40 billion a year in lost revenues. Sotirios Athanassouli, a tax inspector, told The Australian that Greeks are being taxed too much and that the 10,000-strong tax office is poorly organized and equipped. “The US has one tax office for 10 million citizens. In Greece, we have 11 million people and 345 tax offices, and there is no database. The politicians do not want a database in the tax offices because they have their own companies,” he said. He added that many companies are collecting taxes from workers but keeping the money instead of giving it to the government, adding to fears many Greeks have that their taxes are being misappropriated.
Bob Scott, a British ex-patriate living on Crete with his wife, said the new property taxes mean they will have to move back to the United Kingdom. “The current situation is driving most people to distraction because they realize the things being imposed on them are punitive – absolutely nothing is being done to promote growth,” he said. “They see people at the top getting away with what they perceive as blue murder.”
Compounding Greece’s miseries, tax inspectors – who are said to be among the biggest bribe takers in the country – said they will begin a three-day strike on Oct. 17, and will not be available to collect taxes. They are among public workers whose pay has been repeatedly cut. Finance Ministry workers will strike for two weeks beginning Oct. 17 and customs officers will walk off the job from Oct. 18-23, their unions said. The Finance Ministry in Athens was shuttered with a black banner reading “Occupied” hanging down the front of the building, which faces Parliament across the central Syntagma Square. “Everything is falling apart, we are suffering along with everyone else in the public sector,” Nikos Klouvatos, head of the union representing workers at the statistics agency told Reuters. “We would not have reached this point if the government had taken the right measures in time.”
Greece is surviving on a series of $152 billion in rescue loans from the Troika of the European Union-International Monetary Fund-European Central Bank, but the money is being given only under condition the government keep imposing more austerity measures which have caused deep social unrest, protests, riots, and seemingly endless strikes.
Worse, the austerity measures have backfired, creating a deep recession with 16 percent unemployment and the closing of more than 100,000 businesses as Greeks are shutting down their spending, fearful for their futures, especially as 30,000 are being laid off and will be fired in a year and another 90,000 could follow in the next three years.
Data released Oct. 12 showed the central government budget deficit widened by 15 percent in the first nine months of the year as the shrinking economy produced less tax revenue despite a rise in sales tax in restaurants and the new income tax surcharge. That has led the Troika to demand more austerity of the same kind which critics said hasn’t worked and has deepened Greece’s economic and tax woes.
Private sector workers also fear they will be next as the Troika wants cuts of as much as 25 percent in their taxes in what it said was an attempt to boost Greece’s competitiveness, a demand which has led to a planned walkout next week as well, putting more pressure on Prime Minster George Papandreou’s Socialist party.
Christos Staikouras, a spokesman for the major opposition Conservative New Democracy party told Reuters: “The ‘rescue plans’ are collapsing, one after another – the budget execution figures confirm this. This is a bottomless pit, the fiscal holes get wider and wider,” and Greek despair is getting deeper and deeper.