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Fiscal Policy
Translated from: Δημοσιονομική Πολιτική

Lina Mylona

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 TRANSLATION 1

Fiscal Policy
Lina Mylona

Original Paper 

Abstract
Fiscal policy is mainly carried out by changing government spending (G) and changing
taxes (T). Government expenditure (G) includes the construction of roads, ports, buildings,
expenditure on education, on the defense of the country, etc.

Taxes (T) include income tax, profit tax, consumption tax (eg on petrol, cigarettes, etc.),
value added tax, etc. These taxes can have different effects on the behavior of individuals and
the revenue of the state. However, they have a common feature, that is, they reduce the
disposable income of individuals and, therefore, their consumption and savings.

It is clear from the above that government spending and taxes have opposite effects on
aggregate expenditure (demand). An increase in government spending increases total
spending, while an increase in taxes decreases it. The combination of increasing government
spending and reducing taxes increases total spending, while the opposite combination
decreases it. Fiscal policy has one key advantage over other policies, namely that it is certain
to have an effect, in the sense that it affects aggregate expenditure. Making a government
expenditure is, in itself, an expenditure. Also, the increase in taxes is in itself a reduction in
disposable income and consumption.

Fiscal policy also has a basic disadvantage, namely that its exercise requires time, both
for decision-making and for execution. E.g. the financing for the construction of a port is
incorporated in the state budget, the preparation of which, voting in parliament, and execution
takes time. This disadvantage has the consequence that the financial situation when the
project is carried out is different from what the project was planned for and its results may no
longer be desirable. Source:
https://repository.kallipos.gr/bitstream/11419/1969/2/15305_02_MACR O_chapter_15.pdf 9.
FISCAL POLICY
 TRANSLATION 2

State budget: Concept

According to article 5 par. 1 of law 2362/1995 "on public accounting": "Budget is the law
by which public revenues are determined and the limits of state expenditures (credits) are
determined for each fiscal year." "Fiscal year is the time period that includes administrative
acts and events, which are related to the management of public money and the movement of
state property, beginning on January 1 and ending on December 31 of the same calendar
year." The state budget is a formal law and is voted by the parliament during its regular annual
session, as follows from articles 72 par. 1 and 79 par. 1 of the Constitution.

Tax Evasion and Avoidance: Concept

Tax evasion is defined as behavior that aims either at total or partial avoidance of tax
liability, violating the provisions of tax legislation. Tax evasion occurs in many ways, the most
basic of which are the following: A) hiding income from various sources in order to pay a
reduced tax B) showing excessive or fictitious expenses in order to increase the tax
deduction C) not submitting or inaccurately submitting tax returns declarations D) the non-
return of the VAT owed to the government E) the falsification of tax data and books.

Source:
https://www.taxheaven.gr/circulars/24275/arora-to-zhthma-thsforoapofyghs-kai-ths-
forodiafyghs According to Article 55 of Law 4174/2013 on the Tax Procedure Code, "tax
evasion" means: A) the concealment of net income from any source by not submitting a
return or by submitting an inaccurate return and for the purpose of not paying income tax.
Concealment of net incomes also means the case in which fictitious or fictitious total or
partial expenses are entered in the books, or such expenses are invoked in the tax return, so
that net incomes are not shown or are shown reduced. B) the failure to report, inaccurate
reporting, set-off, deduction or withholding of value added tax and withheld and deductible
taxes, fees or contributions, as well as the failure to submit a declaration or the submission
of an inaccurate declaration for the purpose of non-payment of the above taxes, fees or
contributions, insofar as it is provided by the provisions of the tax legislation concerning
taxes that fall within the scope of the Code. C) the collection of a refund of the above taxes
from the Tax Administration after misleading the Tax Administration by presenting false facts
as true or by unfairly concealing or concealing true facts. D) the issuance of false tax
information, as well as the falsification of tax information. The tax item that has been
punched or stamped in any way, without having been registered in the relevant books of the
competent tax authority, a relevant document of its visa, and since the non-registration ends
in 9. FISCAL POLICY knowledge of the person liable for the tax visa element. The tax item is
also considered to be fake when the values indicated on the original and the copy used for
 TRANSLATION 3

tax purposes are different. E) the issuance of fictitious tax data and their acceptance. Virtual
is the element issued for a transaction that does not exist in its entirety or for part of it or for
a transaction carried out by persons other than those listed in the element or one of them is
an unknown person for tax purposes, in the sense that he has not declared the start of the his
claim nor has he considered data to the locally competent tax authority, according to the
address indicated in the data. Virtual is also the element that is allegedly issued or received
by a virtual company, joint venture, society or any other form of business or by a natural
person for whom it is proven that he is completely uninvolved with the specific transaction, so
in the latter case the relevant administrative sanction is imposed, as well as criminal
prosecution is brought against the real person responsible who is hiding. For the purposes of
this law, tax data showing a transaction value lower than the actual value is always
considered inaccurate, while tax data showing a value greater than the actual value is
considered fictitious to the extent of the higher value. Source:
https://www.aade.gr/sites/default/files/2018-07/%CE%9D_4174-2013.pdf Tax avoidance
refers to behavior that exploits loopholes or imperfections in tax legislation, without however,
directly violates the relevant provisions and aims at the total or partial avoidance/reduction of
the tax liability. Tax evasion is essentially a behavior that goes against the spirit and not the
letter of the law.

An action is considered as tax evasion, when it has the following basic characteristics: A)
to be governed by the element of dishonesty, forgery or virtuality B) to have been carried out
in the context of the exploitation of loopholes, ambiguities and poor wording of the tax
legislation, or otherwise exploitation of possibilities ("windows"), which were not intended by
the legislator to be provided. C) be characterized by secrecy in order to prevent the taking of
measures by the legislator to combat tax evasion. 9. FISCAL POLICY Tax legislation
characterizes tax evasion as illegal, because the vast majority of tax evasion actions deprive
the Greek State of significant revenues.

However, according to Article 38 of Law 4174/2013, which refers to tax evasion, no

penalty or other sanction is provided for, except for the fact that the tax administration may
ignore any artificial arrangement or series of arrangements aimed at avoiding taxation and
leads to a tax advantage.

Source:
https://www.taxheaven.gr/circulars/24275/arora-to-zhthma-thsforoapofyghs-kai-ths-
forodiafyghs