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  • Editorial: The wager of tax cuts

    The universal demand for tax cuts was no coincidence. To a large extent that determined the political and electoral preference of the majority of citizens.

    It is common knowlrdge that taxes reached unprecedented levels during the decade-long ecomomic crisis.

    The Greek people made many sacrifices to foot the bill of this cisis.

    They were heavily over-taxed in order to achieve fiscal stabilisation and saw their income was dramatically reduced in trying times.

    Taxes upon taxes, direct and indirect, were imposed indiscriminately on every level of economic activity – and regardless of the taxpayer’s income – and on all assets, whether active or inactive.

    The brutality of the taxes were such that no one remained unscathed.

    Lower, middle, and upper classes paid twice and thrice with hikes in tax rates, ENFIA real estate tax, extraordinary contributions, VAT tax, consumption tax, endless presumptive wealth and income taxes, whether or not there was actual income from that wealth.

    The burden of taxation is confirmed by the accrued debts to the tax bureau, by the massive sell-off of real estate, by the disclaiming of inheritance, by the number of people who turn in their license plates, and by the sorry state of households.

    The universal demand for tax cuts was no coincidence. To a large extent that determined the political and electoral preference of the majority of citizens.

    The new government has trumpeted that tax cuts are a top priority.

    Indeed, during its first months in office it has honoured its pledges.

    It reduced the ENFIA tax and passed a cut in tax rates for businesses and lower income brackets.

    At the same time it gave the real estate market a breather by suspending the VAT tax on property transfers. It left open the prospect of targeted tax cuts for specific groups of the population and promised more dynamic adjustments in the future.

    Undoubtedly the current tax structure cannot endure over time due to the multiple burdens and the dysfunctions that it creates in the economy.

    The current post-crisis period is incompatible with the tax burdens of the past.

    The taxation system must be dynamically growth-oriented, lead to the creation of new wealth, and be geared toward lower tax burdens.

    Nonetheless, everyone can understand the value of fiscal stability and the continuing role of tax revenues in maintaining it.

    It is therefore exceptionally important that policies geared toward growth be accompanied by policies to broaden the tax base and ensure a balanced participation of all in tax obligations.

    The broadening of elecftronic transactions and the digitalisation of tax obligations, invoices, and vouchers, give the tax bureau the ability to cross-ckeck. It bolsters tax authorities in the effort to track down undeclared income and various contraband revenues.

    Consumers with their stance and behaviour have a role in combating tax evasion and tax avoidance.

    In short, the wager of tax cuts concerns us all.

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