Greece Considers New Amnesty Program for Tax Cheats

ATHENS – The new coalition government led by Prime Minister Antonis Samaras’ New  Democracy party is mulling whether to offer a new amnesty to tax evaders in  a bid to bring in about 1.5 billion euros, or $1.81 billion out of the nearly $70 billion they owe. Greece is under the gun from international lenders providing bailout loans who are demanding the government either raise $15 billion or make the equivalent in cuts to its essentially-dead economy.
Greece is surviving on a first series of $152 billion in rescue loans from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) that is withholding a second package of $173 billion until the government administers more of the austerity measures that have driven the country’s economy into the ground.
Previous governments have virtually ignored the tax cheat problem, and while some 200 tax evaders were arrested earlier this year, there have been no high-profile prosecutions and the effort has brought in only a small amount of what is owed. The Troika has been pressing Greece for two years to do more about tax evasion but the government has been reluctant to press for more collections.
The new coalition government is beginning to cross-check tax records but is not allowed to investigate bank records, although a recent report by three researchers in the United States, including two Greeks, found those were more reliable and likely to indicate true worth and identify tax evaders.
A previous amnesty program two years ago, as Greece was beginning pay cuts, tax hikes and slashed pensions, brought in only a miniscule amount and was criticized as being too lenient on people who’ve been cheating the country for years, including doctors, lawyers, business executives and those owing up to hundreds of millions of dollars. That scheme allowed people to pay a fee so their tax cheating records wouldn’t be investigated at the same time the government was beginning programs to double income and property taxes and tax the poor.
The new amnesty could cover arrears up to the end of 2011, sources told the newspaper Kathimerini. The Finance Ministry will also introduce fast-track auditing procedures to clamp down on evaders, sources added, similar to previous crackdown vows that never materialized. The details came as Troika inspectors were due in Athens to press the government to make another 2.5 billion euros, or $3 billion, this year. The Troika wants $15 billion in cuts or the equivalent amount raised over three years.
A cost-cutting program is being based on a report by the Center of Planning and Economic Research (KEPE) recommends a range of measures, including setting a ceiling of 2,400 euros or $2,900 monthly on pensions, which could save 5.1 billion euros, some $6.16 billion. Other ministries have offered another 3 billion euros, or $3.62 billion in cuts. In Germany, which has been highly critical of Greek tax collection efforts, a study by a researcher at Johannes Kepler University found that tax cheats are costing that country about 65 billion euros, or $79 billion.
(Sources: Kathimerini, Bloomberg)