Greece In Bid To Raise Tax Revenues

by Ulrika Lomas, Tax-News.com, Brussels

04 April 2005

Greece has increased its rate of VAT and hiked 'sin taxes' as part of a strategy to increase revenue collection that will also soon include a crackdown on tax evasion.

The tax measures, passed under an emergency parliamentary procedure last Tuesday and put into effect on April 1, have increased the country’s rate of VAT by one percentage point to 19%.

The move is designed to raise an extra EUR500 million in tax revenues this year and bring about a reduction in the government’s budget deficit.

Last year, Greece’s budget deficit reached 6.1% of the country’s GDP – a record high for a member of the eurozone, brought about in large part by costs associated with the staging of the Olympic Games – and the government has pledged to reduce this to 3.5% in 2005 in a bid to appease the budgetary concerns of the European Union.

To help the government achieve its targets, Finance Minister George Alogoskoufis told the Financial Times recently that more focus will be placed on tax compliance, including in the area of VAT.

A one-off tax amnesty also forms a part of the revenue-raising plans.

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