By Chrysostomos Tsoufis

With €40 billion in tax evasion – that’s how he calculates it Giannis Stournaras – it is not possible to have so many tax breaks.

This is the meaning of his words Governor of the Bank of Greece in the context of the interview he gave at the Circle of Ideas conference. The Central Banker requested the review of tax exemptions in order to strengthen public coffers at a time when the country both needs public investments and “reserves” to deal with extraordinary events due to geopolitical factors or the climate crisis.

Based on last year’s budget – this year’s will be submitted at the end of the month – the 1047 different tax exemptions cost the public coffers €12.9 billion, or almost 6% of the country’s GDP. The double crisis – health and energy – inflated the tax exemptions by almost €4bn compared to the 2022 budget as they were 967 and cost €8.9bn. In 2016, the tax exemptions were 716 and totaled a little over €3 billion!!!!

The lion’s share of the tax exemptions are natural persons who enjoy 231 different exemptions at a cost of approximately €5 billion. €3.8 billion concern the tax-free limit.

In 39 cases exemption was related to Covid or some natural disaster.
31 exemptions concern salary income
27 the objective costs
22 the capital – interest, dividends, other rights-

200 different tax exemptions were enjoyed by businesses this year. To be precise, 53,000 were relieved by €1.3 billion.
38 were related to expense deductions, an issue that the government is already considering
36 the pandemic and natural disasters
26 the income
16 the reduced tax rates.

The third most populous category has to do with VAT with 85 tax exemptions. The benefit for businesses, professionals and consumers was €821m. Private education services have the biggest tax exemptions, saving €397 million.

€1.2 billion is the deficit in public revenues caused by the exemptions to the Social Security Tax. Energy products with €590 million and alcohol with €580 million stand out.
The 5 tax exemptions related to insurance premiums cost €422 million
Exceptions to the classification fee cost €120m. Exemption from the registration fee, partial or total, is granted to hospitals, large families, taxpayers with three children, foreign diplomatic services and owners of hybrid-electric cars.

The re-evaluation of tax exemptions on the basis of whether they really support the weakest could, according to Giannis Stournara, free up important resources that could be redirected to where there really is a need.