IMF: Catch Tax Cheats or Cut Wages, Pensions

If the Greek government fails to collect from tax evaders it will be forced to again cut worker’s salaries and pension benefits despite Prime Minister Antonis Samaras’ promise he wouldn’t impose more austerity, the International Monetary Fund’s man in Athens said.
In an interview with the newspaper Ta Nea, Poul Thomsen said that failure to improve tax collection this year would result in further cuts to pensions and wages. Tax cheats owe more than $70 billion, and despite a few well-publicized crackdowns, not a single major tax evader has been prosecuted.
“To avoid more reductions to salaries and pensions, it is of vital importance that the government progresses with the organization of the tax administration,” said Thomsen. “The government has recognized that the lack of progress is a serious problem and the program now includes steps to tackle this.”
Thomsen’s comments came as Fotis Kouvelis, the leader of the junior coalition partner Democratic Left, ruled out the possibility of further wage and pension cuts in an interview with Parapolitika newspaper. Kouvelis, however, has often given initial opposition to austerity measures but always relented.
The coalition government, which also includes the PASOK Socialists, rammed a $17.45 billion spending cut and tax hike plan through the Parliament in December over fierce opposition, leading Samaras to tell austerity-weary Greeks he wouldn’t come at them again with more. The IMF, however, said he would be forced to do so unless the government picks up revenues from tax cheats.
Samaras, the New Democracy Conservative leader, and Finance Minister Yiannis Stournaras are working on a plan to enhance tax collection from evaders, including the possibility of mandatory jail time as the law now only allows suspended sentences in the infrequent cases when tax cheats are prosecuted.
That comes as the European Union, which, with the IMF and the European Central Bank makes up the EU-IMF-ECB Troika putting up rescue loans for Greece, is due on Jan. 28 to confirm release of a 9.2 billion euros ($12.38 billion) installment, although 7.2 billion euros ($9.69) won’t go for social services but to help recapitalize banks who took big hits when a previous government imposed 74 percent losses on holders of Greek bonds.
Greece will then have to complete more previously-promised reforms before getting two remaining installments of 2.8 billion euros each ($3.76 billion) in February and March as the IMF’s share of an incoming series of 52.5 billion euros ($70.6 billion) in Troika monies.