An essential element of Greece's recovery plan has been to collect more taxes from a population that has long engaged in tax avoidance. The government is owed 45 billion euros in back taxes, tax officials in Athens said, only a fraction of which will ever be recovered.
To understand the difficulty, just talk to Nikos Maitos, a longtime official in Greece's financial crimes investigation unit.
When he and a team of inspectors recently prowled the recession-hit island of Naxos for tax evaders, a local radio station broadcast his license plate number to warn residents.
"One repercussion of the crisis is that people are harder to find," Mr. Maitos, an imposing, burly man, said last week in his sweltering office on the edge of Athens. "And when you do find them, they don't have money."
Even tax collectors, who have had to take large pay cuts, find that budget reductions make it hard to pay for the gasoline needed to reach their targets.
"After two and a half years of austerity, it's really a difficult time to bring in revenue," said Harry Theoharis, a senior official in the Greek Finance Ministry who helps oversee the country's tax payment system. "You can't keep flogging a dead horse."
Salaries and pensions in the private and the public sectors have been cut by up to 50 percent, leaving Greece 495 million euros short of its revenue targets in the four months ended in April, according to the Greek Finance Ministry. With less cash, consumers have curbed spending, leading thousands of taxpaying businesses to fail.
Income expected from a higher, 23 percent value-added tax required by the bailout agreement has fallen short by around 800 million euros in the first four months of 2012. That is partly because cash-short businesses that were once law-abiding have started hiding money to stay afloat, tax officials said.
Greece's General Accounting Office said recently that the state collected 25 percent less revenue in May than it did a year earlier. And the state has had to slash its goal of raising 50 billion euros from privatizations to just 3 billion euros as foreign investors lose interest....
Tax collectors got another potential lift recently when the government started enforcing a 1995 law that gives them access to bank accounts of suspected tax evaders.
But Nikos Lekkas, a top official at the financial crimes agency where Mr. Maitos works, said Greek banks had obstructed nearly 5,000 requests for account data since 2010.
"The banks delay sending the information for 8 to 12 months," he said. "And when they do, they send huge stacks of documents to make it confusing. By the time we can follow up, much of the money has already fled."
In the past two years, the agency managed to assess back taxes worth 650 million euros on 210 of the cases, he said. But only 65 percent could be collected.
One challenge lies in what Mr. Lekkas calls the big fish — 18,300 offshore businesses belonging to wealthy Greek individuals and companies. Authorities are trying to trace the owners through property records, and they recently seized several large properties linked to offshore companies whose owners owe tens of millions of euros to the state.
That leaves collectors having to go after mostly smaller tax evaders, often with mixed results.
During a surveillance trip on the resort island of Santorini, Mr. Maitos said he and two colleagues observed a gas station owner insisting on cash-only transactions to avoid declaring taxes. When confronted, the man lashed at them with a bullwhip while cursing the state for taking his money.
Officials said things might improve drastically once Greece's entire tax system is computerized, a move that is supposed to be completed by the end of this year.
Charalambos Nikolakopoulos, the head of the Greek tax collectors' union, said there was no need for outsiders to straighten things out.
"Yes, we need change," Mr. Nikolakopoulos said. "But things will only improve in Greece when we get a stable government that will impose its political will."
Wednesday, June 6, 2012
Greece is Running Out of Money and I Can't Stop Laughing
This CNBC article about Greece going broke is very serious yet I have trouble not laughing at certain bits (especially the ones I placed in bold). Must be my Russian genes: