Greece’s drive to crack down on flagrant tax evaders such as doctors and lawyers is flagging and must be reinvigorated, a report by the European Union and International Monetary Fund said on Monday.
Athens has collected just half the tax debts and conducted less than half the audits it was supposed to under the targets set by its lenders, according to a survey by the country’s international lenders which was compiled in November.
“The mission expresses concern that authorities are falling idle and that the drive to fight tax evasion by the very wealthy and the free professions is at risk of weakening,” it said.
By the end of September authorities had conducted 440 checks on suspected wealthy tax evaders, compared with a full-year target of 1,300. About €1.1-billion ($1.44-billion) in overdue taxes have been collected so far, less than the €2-billion targeted.
The lenders urged Greece to improve tax collection and focus on the cases most likely to produce results. “Doctors and lawyers are a good place to start,” they said.
Tax evasion is endemic in Greece, making it more difficult for the government to shore up its finances under its €240-billion international bailout.
With revenues falling short and the austerity-hit country obliged to meet its fiscal targets when its economy is shrinking for a fifth year, Athens is hiking taxes on middle-class wage earners who can’t hide their income.
After a Christmas recess, parliament is expected to pass a new tax law which aims to raise about €2.5-billion over the next two years as part of a €13.5-billion austerity package.
A second piece of long-delayed legislation to crack down on tax evasion will follow later in the year, the government said.
Perceived tax injustice has dented the popularity of Greece’s pro-bailout ruling coalition. The radical leftist Syriza party, which opposes austerity and advocates a big and immediate debt writedown, has taken the lead in almost all the opinion polls published since a June election.
Improving Greece’s slow tax administration and justice is a key objective of the bailout. According to the report, individuals and companies have racked up €53-billion of tax debts to the government, a figure that corresponds to about a quarter of the country’s gross domestic product.
But just 15-20 per cent of that amount can be collected, the EU/IMF said, given that a large number of these tax cases are old and the debtors have already defaulted. According to a list of tax sinners published last year, Greece’s biggest tax debtor was state-run railway company OSE.