Wednesday, July 13, 2011

Tax Arrears in Greece

I wrote recently about tax evasion in Greece. I wanted to focus on a related issue: tax arrears, which are taxes owed to the government but not collected yet (as opposed to tax evasion, which includes both arrears but also tax that is not reported to begin with). The Ministry of Finance estimates that arrears in June 2011 amounted to €41.1 bn, which is a staggeringly high number as the table below shows:
  • 12% of Greece’s year-end 2010 public debt
  • 18% of 2010 GDP
  • 36% of projected spending for 2011
  • 43% of projected revenue for 2011 
  • 82% of the €50 bn privatization target 
  • 90% of projected tax revenue for 2011
  • 242% of projected direct tax revenue for 2011
  • 246% of projected budget deficit for 2011.
Besides the size of the bill (which governments have offered various excuses as to why they cannot collect it), what is also astounding is its distribution. There are ~900,000 people or legal persons with tax arrears – this equals ~15% of all taxpayers in the country (the Ministry of Finance reported in 2009 5.6 million tax returns from individuals and 221,363 from legal entities). Of those arrears, 892,000 owe less than €150,000 each and 716,000 owe just €3,000 or less. The rest – 14,700 persons or legal entities – each owe over €150,000. When it comes to the total bill, however, those 14,700 (1.6% of the total) make up 90% of total at €37 billion. This is obviously where the government is focusing its efforts.

There is not much more to say about these numbers that is not obvious – the demonstration, once again, of a status apparatus that does not work, of political legitimacy and will that is lacking, and of the implications of such laxness for society’s sense of fairness. But there is also a broader point: one that is linked to the utilization of state assets and public property that is estimated to be as high as €500-€600 billion; of how much this country can accomplish with better management and more will. 
Gives the phrase «λεφτά υπάρχουν» (“there is money”) new meaning.


  1. Your topic begs the following questions:

    1. Have those taxes been fairly assesed or are they contested by the respective tax debtors on reasonable grounds ?

    2. Are those tax debtors solvent and is there any reasonable chance of collecting even 10% thereof ?

  2. About 15 years ago, the Italians conducted public raids of--largely private--companies which had not paid their taxes. The government took people away in handcuffs and perhaps put them in jail for a short time. This worked for a bit. Owners who used to keep 2-3 sets of books started to pay something. Alas it did not last long. Berlusconi came to power in '94. I don't know if the level of tax revenues has remained stable, fallen or increased.


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