Greece – Tax Arrears – Government Accumulating “Assets” Of 1.3 Billion Euros A Month

You have to wonder, if the tax arrears keep accumulating at the same increasing pace, how long it will be before Greek citizens owe the same amount to the state as the state owes to its creditors.

Tax arrears are growing at an accelerating rate in Greece. It now stands at 1.3 billion Euros a month in debts being transferred from the Greek government onto the private sector. At this rate you can imagine the government being able to wipe out much of its debt.

This trend is something I have been highlighting for a while now.

The tax increases have simply made it impossible for the majority of self-employed Greeks to keep pace. The is causing mass layoffs and it is leading to a ballooning of overdue taxes.

The Greek state is now “owed” 55.3 billion Euros by taxpayers. Greek GDP at the end of 2012 was around 200 billion.

It does not take a rocket scientist to realise where this ends.

Assuming the rate of increase of tax arrears continues and ends 2013 with a rate of 3 billion Euros a month, which I think is more than possible, the Greek government can expect to transfer all of its debt on the private citizen within 9 years or by 2022 (assuming a debt-to-gdp ratio of 200% in 2013).

(It is very important to note that the growth of tax arrears is very predicatable as the taxes being imposed on the Greek population are fixed regardless of income).

I don’t imagine it will get to a point where the government’s debt in its totality is transferred to the private sector but you can imagine a situation where a big percentage of it is, 50% for example, and for these taxes to paid through more draconian tax measures and seizures of property and assets.

These draconian tax measures could come in the form of taxing bank account balances, outlawing transactions in cash and taxing electronic purchases, more flat taxes, on CO2 for example, the list goes on.

With regards to property seizures, the court system in Greece has huge backlogs so these seizures are not going to processed by a judge so ultimately the government will be “forced” to take extra judicial action.


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