The government wants to “close the VAT gap we have between where we are and what the average European space is,” Deputy Finance Minister Harry Theoharis told the Greek parliament’s Economics Committee during the discussion on the draft state budget for 2024.
“This means that by 2026 we must boost revenues, especially in VAT, by nearly 2 billion euros, after we already covered 2.5 billion toward closing the gap,” Theoharis said.
He also condemned the calls from the main opposition to reduce VAT or cancel the special consumption tax. “We have a prudent fiscal policy that brings results. Last year we had a 0.1% in primary surplus, when we expected a deficit. This year we are exceeding 0.7% of that state budget in primary surplus, and we are definitely at the 1.1% of the medium-term budget, which was our target, therefore we are continuing in the last year of this great fiscal adjustment that will get us to the desired primary surplus of 2.1% for 2024,” Theoharis added.
In terms of a rise in revenues from property taxes – which revenues are expected to be 160 million higher this year – he said it was attributed to the higher percentage of collectability (by about 5 percentage points) of the annual real estate tax, or ENFIA. “Following the last great ENFIA reform, the tax base expanded. There was a great rise in collectability because we got citizens who could not pay ENFIA for years managed to pay last year’s ENFIA, coming in to settle some of what they owed. Therefore, the measures are effective,” the minister added.
Overall, Theoharis noted, the rise in revenues for 2023 by 9% compared to 2022 “relates to tax compliance and the management, even partly so, of tax evasion.”
Despite the opposition’s accusations that large corporations are not being taxed, he added, a total of 7.1 billion euros were collected – much of which were extraordinary taxes – such as 630 million from refineries alone, and 400 million from the initial taxation of excess profits of energy companies.
In 2024, the state expected to see a rise of revenues to 68.37 billion euros, up by 3.1 billion or 4.9% higher than 2023, due to the significant increase of taxes for individuals (by 959 million euros), attributed to the increase in wages and the new way of taxing freelancers and independent business owners, the minister added.