Greece to Hit 2014 Tax-Income Targets, Revenue Chief Says

Greece will overcome a first-quarter shortfall in tax income and meet its full-year targets as the economy recovers, said the official in charge of the country’s public revenue.

A tax-revenue hole of 200 million euros ($275 million) to 300 million euros since the beginning of 2014 stems mainly from temporary disruptions caused by administrative overhauls and changes in payment deadlines, said Haris Theoharis, Greece’s secretary general for public revenue.

“Macroeconomic data seem to be on our side,” Theoharis, a British-educated software engineer and a former vice president at Lehman Brothers Holdings Inc., said in a Bloomberg News interview yesterday in Athens. “Greece met its budget-revenue targets in 2013 for the first time after some 15 years and I see no reason to doubt we will make it again this year.”

Greece is trying to wean itself off 240 billion euros in international emergency aid since 2010, emerge from a six-year recession and qualify for further debt relief from the euro area. Tax revenue for the first two months of 2014 totaled 6.88 billion euros, which was 454 million euros, or 6.2 percent, below target, according to government figures released last month. Data for March aren’t publicly available yet.

Theoharis is the public face of Greece’s push to tackle decades of tax evasion, lax revenue collection and overspending that triggered the European debt crisis and led to the biggest sovereign-debt restructuring in history. Creation of the Finance Ministry post occupied by Theoharis since 2013 was required under Greece’s rescue by the euro area and the International Monetary Fund.

Budget Surplus

The Greek government of Prime Minister Antonis Samaras has hailed progress in revamping the economy and the state, predicting a return to growth this year and asserting that the country achieved a budget surplus before interest payments -- a so-called primary surplus -- in 2013.

The euro area has agreed to “consider further measures and assistance” for Greece, whose debt stands at close to 180 percent of gross domestic product, once the country achieves a primary surplus. The European Union is due later this month to confirm Greece’s budget figures for 2013.

Although below target, Greek tax income so far this year is higher than it was in the same period in 2013, according to Theoharis, who said the collection of overdue claims from taxpayers and companies has increased more than 40 percent. Signs of a stronger domestic economy should help reinforce the income trend, he said.

Final Quarter

“Available indicators show that the rebound from recession was steeper in the final quarter of 2013 than first estimates suggested,” Theoharis said. “This is one more reason to be optimistic on revenues.”

Greece’s GDP contracted 2.3 percent in the fourth quarter of 2013 compared with the same 2012 period, the Greek statistics agency said on March 11. The Greek government and the EU predict GDP will grow 0.6 percent this year after shrinking 3.9 percent last year.

Other negative trends in tax revenue highlight the importance of the forecast economic rebound.

The Greek government has added claims of unpaid taxes, fines and other liabilities to the tune of 2.3 billion euros so far this year, bringing total unpaid arrears owed to the Greek state to about 63 billion euros, Theoharis said.

Of that total, 23.7 billion euros are unpaid taxes and fines, most of which will never be recovered because the companies that owe the money have gone out of business, he said.

“Our revenue targets this year take arrears into account,” he said. “We have been realistic.”

‘Bear Fruit’

In addition, some Greek tax-system changes have had an upfront cost as a national database is established, according to Theoharis.

“It will take some time before they bear fruit,” he said.

A move to an electronic-based tax system is yielding more immediate rewards when it comes to tax declarations, according to Theoharis.

“Already 97 percent of tax-return statements are completed and submitted online,” he said.

Theoharis said his staff is now focusing on combating tax evasion by wealthy individuals and on reducing the administrative burden for companies.

“I expect tangible results on both fronts soon,” he said. “People have already started noticing the difference.”

Theoharis said Greece needs a respite from new tax legislation after a slew of fiscal laws over the past four years.

“Greek society, the business community and the state should now stop asking for continuous changes in tax legislation,” he said. “Even if there are minor mistakes in legislation, we should revisit them every four years, and not change things all the time.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE