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Good News Finally Coming for Greek Tax Collectors

The number of Greeks filing and paying their taxes shot up sharply in the wake of Sunday’s contentious elections.

View over the caldera of Santorini in Greece.
Tom Pfeiffer | Getty Images
View over the caldera of Santorini in Greece.

In the week before the election, the number of filings averaged roughly 49,000 per day, never reaching 50,000, according to a source in the tax collection office. However, on Monday, 53,000 Greeks filed their taxes and on Tuesday, nearly 58,000 paid (57,998 to be exact) representing a rise of more than 18 percent compared to last week.

Within the tax collection office, the rise in filings is attributed to the election outcome; many believed that leftist opposition leader Alexis Tsipras, the leader of Syriza, would rescind recent tax hikes if he won the election. Instead, Antonis Samaras, leader of New Democracy, took first place and is in theprocess of forming a government.

Working Greeks’ collective tax bill will be 5 times higher this year compared with last year. The tax collection office expects to send out tax bills for 5 billion euros, while last year they sent out bills for only 1 billion euros. (Five-point-five million filings are expected this year, down from 5.6 million last year.)

The dramatic increase in the nation's tax bill is due not only to higher tax rates, but also a sharp drop in the threshold income-level for paying taxes.

Until last year, Greeks earning 12,000 euros or less per year did not pay taxes. But that was subsequently reduced to 8,000 euros, and then 5,000 euros.

There is an additional “solidarity” tax on Greeks, which ranges from 1 percent to 4 percent depending on income, and is applied before any other deductions.

As a result, the top marginal tax rate has gone from 45 percent to 55 percent in the last year.

By this time last year, the tax collection office had sent out 2.2 million bills, representing a cumulative tax bill of 200 million euros. This year, they’ve sent out only 900,000 bills, thus far, for a total of 820 million euros.

(The delay in sending out tax bills is due to the creation of a new property tax via electric bills, which occupied the tax collection office for the first part of the year, and delayed the preparation of income tax bills.)

The yield on the tax bills has historically been roughly 90 percent, but with the dramatic rise in taxes over the last year, and the destructive recession, which has lead to massive job losses , there are concerns the yield this year will be lower. Additionally, salaried Greeks have historically paid their tax bills in advance through withholdings in their paychecks, but many of the new taxes were imposed retroactively, meaning many Greeks will have to write checks to the government.

While tax evasion is notorious in Greece, tax experts say it is done primarily by the self employed (private doctors, lawyers, or plumbers for example) or those who do not work on salary. Salaried individuals have a very difficult time evading taxes because of automatic deductions by their employer.