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Tax evasion in Greece

Euractiv reported last week (5 February) that the European People´s Party (EPP) in the European Parliament intends to propose a motion of censure in the parliament against the right-wing Independent Greeks party. Following the recent election in Greece, they were included in a government coalition with the Syriza Party. Its founder Panos Kammenos has been appointed to minister of defense. The motion would be similar to that which was passed in 2000 when the Austrian government included the far-right People’s Party.

The left-wing Syriza party and the right-wing or even ultra-nationalist Independent Greeks party make strange bed-fellows but are obviously united in their opposition against the austerity policy which was imposed on Greece by the Troika. This doesn’t absolve Syriza from publicly distancing itself from the conspiracy-minded views of its coalition partner and condemning the most outrageous ones. It might the best way to prevent the above-mentioned motion from being adopted.

In an interview on Greek TV last December, Kammenos was quoted as saying that the Jews in Greece don’t pay taxes. This blatantly anti-Semitic remark prompted a sharp rebuttal by the Central Board of Jewish Communities in Greece which represents a tiny minority of 5 000 people. I don’t know if Kammenos has yet apologized, as he was asked to do, or if the new Greek Prime Minister Alexis Tsipras has asked him to do it.

Kammenos, as former deputy minister of shipping in Greece, surely knows better than most other people in Greece who are guilty of tax evasion in the country. It’s almost everyone in Greece besides employees whose taxes are withdrawn at the source. In particular it’s the shipping companies which account for 7 % of GDP. They are even protected by the constitution. In which country do you need to amend first the constitution to change tax legislation?

According to news reports the leftist Syriza party fears a clash with the shipping tycoons and, notwithstanding election promises, is not likely to change their generous tax regime. Greece is still trying to create a functioning tax system (International New York Times, 6 February). Estimates of the amount of non-reported taxable income and taxes not paid show astonishing figures. If companies and self-employed people would pay their taxes, the government could wipe out its budget deficit and substantially decrease the national debt.

A Task Force for Greece was established by the European Commission in 2011 to coordinate technical assistance in a number of policy areas, incl. revenue administration, public financial management and government auditing. In its latest quarterly report it states that the tax administration has been strengthened but no figures are given as to whether this has been translated into increased tax collection.

In 2013 it was reported that out of 13 billion euros that is owed by Greece’s 1,500 biggest tax debtors, only about 19 million euros had been collected despite draconian measures such as arrests of tax offenders.

As regards auditing, the Hellenic Court of Audit (HCA) still struggles with financial auditing and is probably the only one in EU that doesn’t carry out any performance auditing. Why? Because the Task Force thinks it’s too early to extend any technical assistance to develop HCA’s capacity for performance auditing? A complete overhaul of the HCA is long overdue so that it can fulfil its role as a national watchdog in the Greek public administration and enhance transparency, accountability and effectiveness.

We can all agree that the demands for debt relief and a reversal of the disastrous austerity policies are justified. But Greece needs also to address its self-inflicted problems, among them the ineffective public sector and tax evasion which is considered a “national sport” in the country. Ordinary people will not pay their taxes if there is no tax solidarity, i.e. if self-employed people and companies continue with tax evasion. Nor will they pay taxes if they in addition have to pay bribes for elementary social services. This erodes democracy.

And anti-Semitic statements must be condemned, especially in a country where the percentage of people believing in anti-Semitic stereotypes and prejudices is among the highest in Europe. Statements such as the one by Kammenos only nourish anti-Semitism and divert the attention from Greece’s real problems.

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