The austerity principle of making sure the taxman was empowered to collect every last cent outstanding, even if it were from a person living below the breadline, is set to undergo change. Legislation expected to pass on Thursday evening now puts the brakes on tax inspectors throwing people on the street for failure or inability to pay taxes. This rule will also apply to Social Security debts.
The Socialist government, which on Thursday presented Parliament with one of three law decree reform proposals, the others being by the Left Bloc and Communist Party, states that no property can be sold off, no matter what the debt is to the taxman.
But one exception was made, with properties with a declared value of above 574,323 euros still within the taxman’s reach. This was put forward to avoid wealthy taxpayers from converting all their assets into one single, expensive property in order to gain protection against the advances of tax inspectors.
However, properties evaluated above this figure can only be put on auction once a year has elapsed since the expiry of the deadline to make a voluntary payment to the state.
The Socialists had previously stated in their election manifesto that they would not allow the seizure of properties whose values were higher than an outstanding debt to the state.
But the Socialists decided to go one step further, completely disallowing the sale of a property, though the real estate in question can still be attached to a debt, meaning that should the property be sold in the future, the taxman will be the first to collect a cheque from the purchaser.
The Left Bloc had earlier called for the taxman not to have any rights over property.
In substantiating its argument, the Left Bloc recalled the case of a widow, who in 2014 lost her home due to a debt of €1,900. The plight of this woman is said to have been one of the biggest sources of motivation for the leftist parties in making this law reform one of the first to be introduced since the Socialist government came into power last November.
The widow in question was earning the minimum wage and saw the home she and her late husband had paid off eventually sold for the meagre sum of €19,500.
The Socialists, Left Bloc and Communist Party, all in opposition at the time, presented a proposal for a law change following this case, but it was dismissed by the centre-right coalition which held a parliamentary majority.
Since 2014, more than 83,000 homes have been attached by the taxman, though this figure did drop somewhat in 2015 when the previous government shifted the decision-making onus back onto local tax department chiefs and away from the dreaded “computer in Lisbon.”
Figures out this week also revealed that the taxman set a new record in coercive collections in 2015. While the target set out at the beginning of last year had been 1.1 billion euros, tax collectors improved on this by almost 20 percent, raking in 1.3 billion euros, for an average of 3.5 million euros a day.