The Greek government announced a package of incentives aiemd at boosting the collection of overdue state debt in an effort to raise crucial funds necessary to keep the country afloat over the next three months.
The Greek government’s statistics on debt
Overdue tax debt: 46.6-bln euro growth during the five years of the memorandum
Overdue tax growth: 60% from 2013-2014
Total tax owed to the state: 76 bln euros
Number of people/enterprises who owe public debt: 3,670,000 citizens and 447,000 enterprises
Number of people/enterprises who owe up to 3,000 euros: 3,174,000 individuals and 357,447 companies
Number of people/enterprises who owe over 1 mln euros: 2,000 individuals, 3,000 enterprises
Alternate Finance Minister Nadia Valavani presented the government’s plan during a press conference, offering a 50% debt haircut for overdue debt recorded by Dec. 31, 2013, except VAT, property taxes, leasing and special consumption taxes. Extra incentives are given for those who make lump sum repayments with a one-off settlement.”
What this means in practice:
Paying 10% of debt up front by April means that someone who owes 10,000 euros to the tax office can pay 1,000 euros and write off 2,000 euros. The other 8,000 euros would be paid off in 100 installments.
A lump sum payment would mean a 50% write off. For instance, someone who owes 600,000 euros who pays in lump sum would only be required to pay 300,000 euros.
The aim of the program was to offer respite to over 3.5 debtors while also boosting state revenue. She said that this favorable repayment program, whose deadline ends on April 30 for lump sum payments and May 31 for the 100-installment settlement, was the best settlement that debtors could hope for.
Of course, no recourse or retroactive “haircut” is being offered for hard-pressed taxpayers that … actually paid their debts to the state on time.
What about the single property ENFIA tax?
A new tax to replace ENFIA would be announced after the completion of a program, by June, aimed at adjusting objective property values with the current commercial (depressed) values.
