IMF - Proposal For Tax Offices To Take Over Social Security Contributions

(credit: Wikipedia)

The latest brainstorm idea coming to us from the International Monetary Fund (IMF) is a report that was compiled by four IMF officials and which literally proposes that the Greek government incorporate the vast majority of social security contributions into regular taxation, in the framework of freeing social insurance funds from the responsibility of collecting such dues. Commenting on the report, the Sunday Edition of the "Kathimerini" newspaper said that the IMF proposes that Greece’s main social security fund, IKA, only have to collect contributions which are overdue by at least six months and amount to more than 5,000 Euros.

The proposal to change the way social security contributions are collected is seen as vital to ensuring the sustainability of Greece’s social insurance system, which has seen taxpayers’ debts soar 240 percent over the last six years. IKA, which accounts for 61 percent of total contributions, was owed a total of 11.7 billion Euros at the end of last year.

Greek governments have created 52 different schemes aimed at collecting overdue social security contributions since 2002, but despite the favorable repayment terms included in these schemes, 35 percent of debtors do not abide by the agreements. In fact, the IMF believes that at least 92 percent of the contributions owed to IKA are more than 12 months old and are unlikely to ever be collected.

Under their proposal, the State would pass legislation for the transfer of the collection responsibilities to the central tax administration with a view to the system being phased in by 2017.

Apparently this is going to be one of the many subjects that will be thrown on the table for discussion when the Troika comes to town on Monday to begin their assessment of Greece’s progress in meeting fiscal and reform targets. Other topics for discussion include privatizations, reductions in the number of civil servants, an overhaul of the tax system and the possible reduction of VAT in the catering sector.