Filenews 20 November 2022 - by Eleftheria Paizanos
The state's arrears may have fallen by €422m last year, however, the total amount of arrears that citizens have in various government departments reaches €3.14 billion. It should be noted that in 2020 the amount of delayed revenues was €3.56 billion. The analysis of the relevant data shows progress in the overdue revenues of the Tax Department, which decreased to €2.17 billion, from €2.34 billion as it was in 2020.
Arrears of €3.14 billion concern money for which, in some cases, the state will not receive a cent, as they concern debts that are dated and stacked as arrears of state revenue. Of great concern is the fact that some of the debts are classified as insecure, that is, there is a risk that they will not be recovered, as either the debtors are not identified, they have died, or they have gone bankrupt, or if they are legal entities they have gone into liquidation.
The Departments that have the largest amounts of arrears of revenue are the Tax Department, the Medical Services, the Water Development Department, the Ministry of Finance, the Department of Civil Aviation, the Commission for the Protection of Competition, the Judicial Service, the Treasury and the Social Welfare Services.
In these sections, delayed state revenues are increased, due to the non-payment of taxes, fees, social insurance, overpayments of various benefits and administrative fines, by natural and legal persons. In fact, in some cases the debts swell, as they bear interest and charges.
Briefing to the Parliament
The Treasury sent to the Parliament a list of the "receivables", i.e. the delayed revenues of the state, for each department and service. The data were sent at the request of the members of the House Audit Committee, during the discussion of the Financial Report for 2021. According to the accounting policy adopted by the Treasury, "receivables" are the amounts arising in the course of the activities of the state, which have not been received. In detail, the debts were formed as follows:
- In 2021, uncollected revenues in the Tax Department were €2.17 billion, compared to €2.34 billion. in 2020. It is estimated that the majority of debts are indirect taxes, such as income tax, etc. Last summer, when the issue came to light again, the Tax Department argued that the debts concern the period from the establishment of the Republic until the end of 2021. In fact, in an announcement he had stated that the accumulated uncollected tax revenues constitute a negligible percentage of the total taxes collected since the establishment of the Republic of Cyprus. In addition, he had noted that the taxes collected from 1970 to 2021 reached €79. 1 billion, pointing out that the percentage of accumulated uncollected tax revenues does not exceed 3% of the total tax receipts of the Tax Department.
- At €194.7 million last year the backlog of revenues to the Medical and Public Health Services was raised. In fact, debts are increased compared to 2020, which amounted to €129.2 million.
- Uncollected revenues to the Water Development Department in 2021 reached €141.1m. These are debts owed by community councils and individuals. In 2020, delayed revenues were €130.4 million.
- At €120 million the delayed revenues of the Ministry of Finance in 2021, compared to €116.5 million.
- At the Department of Civil Aviation, last year, debts reached €97.4 million compared to €69 million in 2020.
- At the Commission for the Protection of Competition in 2021 the uncollected revenues were €86.5 million compared to €87.7 million.
- Debts to the Department of Road Transport in the last two years have been at about the same level. Specifically, in 2021 the delayed revenues were €63.8 million while in 2020 it was €63.1 million.
- In 2021 at the Judicial Service the revenues not collected were €63.4 million compared to €54.9 million last year.
- At the Treasury in both 2021 and 2020 the uncollected revenues were €41 million.
- In the Social Welfare Services, debts in 2021 decreased to €35.1 million. compared to €41 million in 2020.
Other departments, government agencies and ministries have a smaller amount of backlog of revenue.
Through plans reduced debts
It is worth noting that in previous years the delayed revenues were greater and decreased after the implementation of plans for the settlement of arrears by instalments, which were implemented by the Department of Taxation and Social Insurance. It is noted that, according to the plans, depending on the number of instalments agreed by the interested parties, the interest and charges they were required to pay were reduced. For example, with the plan of the arrears of the Tax Department, when the debts were paid in a lump sum, that is, in one instalment, all interest and charges on the debts were written off. In the plan of the Tax Department, 36,198 arrangements had been made, with an initial debt amount of €705.1 million, which, after the deduction the state's receipts, will be €566.2 million. A few days ago, EDEK submitted to the Parliament a proposal for a law proposing the reinstatement of the plan of overdue tax debts. On the other hand, Social Insurance through the scheme will enter the state coffers around €78 million. The plan provided for a reduction of the additional fee of up to 27% for those who paid earlier than 54 instalments. In this case, too, those who have chosen to pay the amount due in a lump sum are exempted from paying the full amount of the additional fee levied for overdue social debts.
The Audit Office
However, the issue of the state's arrears of revenue has been highlighted many times in its reports by the Audit Office. He had called on the relevant departments to strengthen their measures to collect arrears to the state. Especially for the Tax Department, the Audit Office had stressed the need to take the necessary measures to limit the uncollected debts of the State, which are increasing to an alarming extent. In fact, he had called on the Department to make the most of all the tools at its disposal, based on the legislation adopted in 2014. Among other things, the Tax Department has the ability to proceed with the registration of a lien on real estate and the seizure of money that is in bank accounts.
