As Greek Prime Minister Alexis Tsipras goes into a Battle of the Titans with German Chancellor Angela Merkel, he may find he has as big a fight closer to home: taking on rich tax-evaders.
People like Angeliki Katsarolia, a waitress at the Julia cafe lounge in the rundown neighborhood of Omonia in Athens, want to see him cast his net wide. “I pay my taxes straight from my wages,” she said, who gave up working in luxury hotels where her employers avoided paying her. “I can’t accept that big employers aren’t taxed. They have to pay their taxes too,” Bloomberg reported.
The age-old problem of getting more Greeks to pay their taxes adds pressure on Tsipras, who’s trying to convince Merkel and other euro-area partners he can put his fiscal house in order while raising wages and reinstating government workers. He wants his official creditors to ease the austerity demands that have helped wipe out a quarter of gross domestic product since the start of the crisis.
Germany, the largest holder of Greek debt among euro-area countries and vital to any compromise that will keep Greece in the euro, remains skeptical. German Finance Minister Wolfgang Schaeuble, meeting his Greek counterpart Yanis Varoufakis in Berlin last week, said he repeated his offer to send 500 German tax officials to Greece to tackle the problem, an offer that has not yet been taken up.
Mind the Gap
Just a day after Tsipras’s election on Jan. 25, figures from the finance ministry showed that revenue for the government last year amounted to 51.4 billion euros ($58.2 billion), lower than a 55.3 billion target, in part due to a 1.4 billion-euro shortfall in tax revenue.
Tax Evasion
Fixing the Greek tax system to make it more efficient and fair has had mixed success since Greece revealed a 2009 budget deficit four times as large as that allowed for members of the euro area, in part as tax revenue fell ahead of elections.
Tax evasion was estimated at 30 billion euros annually, according to a study by the Federation of Greek Industries, an employer group, exacerbated by the high number of self-employed professionals ranging from doctors to plumbers.
Tax Inspections
Stores, restaurants and other businesses are required to carry a sign in Greek and English, saying customers don’t have to pay if they aren’t provided with a receipt.
Also on the cards: compiling a register of assets owned by each Greek and audits on those with significant deposits including the so-called Lagarde list of 2,062 Greeks with deposits at a branch of HSBC Holdings Plc in Geneva.
