Mar­ket warns of con­se­quences of di­rect and in­di­rect tax hikes

Kathimerini English - - Focus - BY THANOS TSIROS

The gov­ern­ment will likely have to brace for a drop in trans­ac­tions, in de­clared in­comes and there­fore in pub­lic rev­enues as a re­sult of in­creases in in­di­rect tax­a­tion and in salary and pen­sion de­duc­tions for taxes and so­cial se­cu­rity con­tri­bu­tions.

There are plenty of warn­ing signs al­ready sug­gest­ing that 2017 will be tough on rev­enues, par­tic­u­larly a spike in full-time con­tracts be­ing turned into part­time agree­ments due to the rise of la­bor costs as a re­sult of tax and con­tri­bu­tion hikes. No­tably, al­though taxes on salar­ied work­ers rose in 2016 com­pared to 2015, there was a much smaller in­crease in rev­enues from tax de­duc­tions. At the same time, we are see­ing a grow­ing num­ber of self-em­ployed pro­fes­sion­als clos­ing their books so that they will not have to pay in­creased so­cial se­cu­rity con­tri­bu­tions af­ter these were linked to in­come, as has al­ready hap­pened with the rev­enues from the an­nual pro­fes­sional levy.

Mar­ket pro­fes­sion­als also warn that a fresh slump is on the hori­zon in fuel and cig­a­rette con­sump­tion, from which the Fi­nance Min­istry is hop­ing to col- lect 900 mil­lion euros via in­di­rect taxes. This is a log­i­cal as­sump­tion given that in both to­bacco and fuel, con­sec­u­tive tax hikes have led to a de­cline in con­sump­tion in ex­cess of 50 per­cent.

On to­bacco, the new in­crease in the spe­cial con­sump­tion tax from Jan­uary 1, means that 90 per­cent of the cost of a cig­a­rette pack goes to the state, up from 84 per­cent in end-2016. Le­gal sales are down by at least 50 per­cent, with ex­perts warn­ing that the 20 per­cent share of the mar­ket con­trolled by smug­glers will grow fur­ther. The Fi­nance Min­istry ex­pects ad­di­tional rev­enues of 210 mil­lion euros this year from to­bacco, though ex­perts warn of losses of 150 mil­lion.

The stakes are even higher on fuel, where the state an­tic­i­pates an ad­di­tional 772 mil­lion euros from its tax hikes. How­ever, 2016 saw a drop of 353 mil­lion euros in tak­ings from 2015, and this year al­ready bodes ill as global oil rates have sent re­tail prices soar­ing.

There are also doubts re­gard­ing rev­enues from the new tax on land­lines – it is sup­posed to fetch 54 mil­lion euros – as well as on pay TV and the ex­cise tax on cof­fee.

Cig­a­rette sales are down by at least 50 per­cent, with ex­perts warn­ing that smug­glers’ 20 per­cent share of the mar­ket will grow fur­ther.

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