Fears of revenue shortfall
Gov’t concerned new contributions system for self-employed will fuel tax evasion
Despite their public expressions of optimism for the prospects of bailout talks and economic recovery, government officials privately cite concerns that authorities might fall short of revenue targets related to new pension and tax reforms, Kathimerini understands.
The concern stems in particular from a new system of calculating the social security contributions owed by self-employed professionals which will use real taxable income as the basis for the calculations.
There are fears that the new reform will lead to higher rates of tax evasion and more people concealing the level of their income.
Officials estimate that 80 percent of self-em- ployed professionals such as lawyers and engineers will pay the same or less tax than they did under the previous system. But it is the other 20 percent – the highest earners – that the government is worried about as the new system aims to impose the greater burden on them.
Government officials are also said to be worried about meeting the primary surplus target for this year which, at 1.75 percent of gross domestic product, is ambitious and will require tough fiscal discipline that will not go down well with the public following the introduction of new taxes, including levies on fuel and coffee.
Prime Minister Alexis Tsipras and his aides have insisted that the government’s priority is to kick-start bailout talks so that a review by foreign inspectors can be wrapped up in the coming weeks.
Yesterday, opposition New Democracy’s economic policy chief, Christos Staikouras, accused Finance Minister Euclid Tsakalotos of “doublespeak” and “irresponsibility.” He said Tsakalotos signed three documents that are detrimental to the Greek people: a state budget that includes higher taxes, a Eurogroup agreement for new measures from 2018 and high primary surpluses, and a letter to creditors expressing the government’s “full commitment to remain compliant with our obligations.”