Troika Frets Over Greek Tax Collections

semetaInspectors from Greece’s international lenders saw some procedural problems on their first day in Athens – after three years of pleading, urging, insisting and demanding – the government still has done little to revamp a tax collection system that has let tax cheats escape without paying $70 billion, while pay cuts, tax hikes and slashed pensions are being imposed on almost everyone else.

The ongoing audit is being conducted to see if Greece is meeting reforms as a condition of getting continued aid from a second bailout of $173 billion after a first for $152 billion was spent without making any improvement on the country’s critical economic problems.

The envoys from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) are reported frustrated with further delays in tax collection.

European Commissioner for Taxation and Customs Union, Audit and Anti-Fraud Algirdas Semeta said that a shake-up is sorely needed to boost revenue collections that are far off the mark despite big tax increases as austerity measures have made Greeks slow spending almost to a standstill in some areas.

The ministerial decisions and circulars required to kick-start the overhaul have yet to be issued, the inspectors are said to have complained. Further, the planned absorption by the General Secretariat for Public Revenue of the Financial Crimes Squad (SDOE) and the General Secretariat for Information Systems (GSIS) – part of a broader streamlining program – has yet to be carried out and the recruitment of additional tax inspectors is also behind schedule.

The technical staff have reportedly pressed government officials to fulfill pledges to boost inspections on rich taxpayers, especially in fields where tax evasion is believed to be rife, with doctors and lawyers facing particular scrutiny, the newspaper Kathimerini reported.

In a speech before Parliament, Semeta said there is an unfair tax burden on salaried and low-income Greeks, but said there’s no chance that Prime Minister Antonis Samaras’ request to lower the 23 percent Value Added Tax on restaurants would be approved even though the government said it would help during what could be a record tourist season. Semeta said lower taxes won’t help the economy.

The government is to raise the issue next week when Troika mission chiefs are due back in Athens. Greek officials are also likely to ask for an extension to the deadline for laying off 2,000 civil servants by September.

Talks between the government and the Troika are to focus on four areas – the overhaul of the tax collection system, a streamlining of the public administration, a financing gap for 2015 and 2016 and a program for privatizing state assets.