Year on year government tax revenues plunge 16% in January and the drop in tax revenues is 7% more than predicted.
As has been the story so far, the government predictions have all been hopelessly optimistic. If the Greek government figures were realistic there would probably be more push back from the population.
Tax prisons have also been thrown into the mix although I do not know how serious the threat is.
This is a continuation of the theme I have been predicting for 2013, namely the extra judicial punishment of alleged tax evaders.
I see the trend continuing throughout 2013 as the Greek government’s tax revenue targets continue to missed and missed spectacularly.
There is an ongoing issue of tax debt in Greece, ie tax which is owed to the state but that has not been paid on time. This figure is now standing at 55.5 billion Euros with an increase of 12 billion Euros in the first 11 months of 2012 alone.
To state the obvious, 12 billion Euros in 11 months is a massive rate of default on tax debts. To put it in some perspective the rate of increase in overdue taxes is approaching the same level as the country’s trade deficit.
You can only imagine the rate at which tax arrears are accumulating to increase in 2013. I personally believe it is approaching a critical mass which will see the graph go exponential. If I were to make a prediction I would say the tax arrears figure in Greece for 2013 with surpass 18 billion Euros.
This will be down to numerous factors but the biggest two are as follows.
The 12 billion Euros of arrears built up in 2012 were at a time when taxes were much lower. The new income tax regime being implemented in 2013 will further push people into tax debt. It is obvious the tax levels imposed in 2012 were already too much, increasing it will only push people’s ability to pay further away.
The Greek economy shrank by 7% in 2012 alone, official government predictions are for a 3-4% contraction in the economy. Again, I believe the official forecast is hopelessly optimistic, I am predicting a GDP contraction of over 10% for 2013.
Even if the official contraction figures were to pan out, this on its own would lead to an increasing rate in the accumulation of overdue taxes.
The collapsing GDP, the increasing of the tax load in real terms and the amount of outstanding tax debt already in existence paves the way for the Greek government to impose the extra judicial recovery of over due debts higher up the agenda.
As their position becomes more hopeless you can expect the measures to become more and more desperate and this will inevitably lead to resistance as people stop believing paying taxes are their duty and view them as state oppression of their economic freedom.