CLOSE
Loading...
22° Nicosia,
22 September, 2019
 

Overtaxation led to tax evasion

The lowest deficit belonged to Cyprus, at just 0.6 percent in 2017

By Eirini Chrysolora

Losses incurred by the state coffers due to tax evasion in 2014-17 were greater than the value-added tax revenue increase as a result of consecutive tax hikes, according to a European Commission report on the so-called VAT deficit (the difference between the expected VAT revenues and actual collections).

In that period VAT revenues increased by about 2 billion euros (from 12.6 billion to 14.6 billion euros per year), but the VAT deficit soared by almost 3 billion euros, from 4.6 billion to 7.4 billion euros.

The report shows that the period of the financial crisis in Greece constituted a greenhouse for tax evasion, with the last few years of excessive taxation aggravating the problem and placing Greece second from bottom among the European states, and only above Romania.

The VAT deficit constituted 31 percent of the anticipated revenues from VAT in 2016 and 33.6 percent in 2017. The lowest deficit belonged to Cyprus, at just 0.6 percent in 2017. The average level among the 28 EU countries was 12.2 percent in 2016 and 11.2 percent in 2017.

In the five years from 2013 to 2017, Greece missed out on VAT revenues of 30.12 billion euros, with the losses being smaller in 2013 and 2014 before rising again from 2015 and peaking at 7.4 billion in 2017, about 1 billion euros more than in 2016.

The increase in taxes in 2017, including the hike of the top VAT rate from 23 to 24 percent, led to a rise in takings by 300 million euros year-on-year, but also led to further losses of revenues that sent the balance deep into the red and highlighted how pointless the constant tax hikes were.

According to a European Commission estimate, Greece’s rate is seen to have dropped last year to 31 percent from 33.6 percent in 2017.

Greek Finance Minister Christos Staikouras commented on the report, saying that, “from 2015, the SYRIZA government imposed 29 new taxes on individuals and corporations. The overtaxation of citizens also led to an increase in tax evasion to the tune of almost 3 billion in the previous four years. The choice of the current government is the gradual reduction of the tax burden on households and corporations.”

TAGS
Economy  |  Taxation  |  Cyprus  |  Greece  |  VAT

Business: Latest Articles

X