Even as the Greek government, in an acknowledgment tax evasion is still a runaway revenue-bleeder, said it would set up a council of “Wise Men” to find ways to stop it, the European Union has chimed in that taxes still aren’t being collected, despite the country’s crushing economic crisis.
An EU task force helping Greece overcome the financial crisis that brought it to the brink of bankruptcy said old tax cases have gone largely untouched, while the prosecution of tax cheats, a rarity, was as far as 10 years behind in the court system. With two months to go in 2012, it was still about a billion euros behind the EU target of recovering 2 billion ($2.6 billion).
In a report it said Greece made only 88 audits of large taxpayers, well short of a 2012 target of 300, and 467 of `’high-wealth individuals,” far less than a target of 1,300 target. Despite the failures, the European Commissioner in charge of finance, Olli Rehn, said for some reason that Greece was handling its problems “with determination and resolve.”
Eurozone finance ministers earlier this month agreed on a 52.5 billion ($69 billion) new series of rescue loans but the international lenders, which include the International Monetary Fund and European Central Bank, are still pressing the government to reform its woefully inadequate tax collection system and go after tax evaders, which all previous governments have failed to do.
Greece’s partners in the 17-country eurozone agreed only last week to hand over the next disbursement of the country’s bailout loans, which will prevent it from going bankrupt and triggering more turmoil in financial markets.
The EU set up a task force of specialists to guide Greece through that process and it produces quarterly reports to chart progress. Taxation is a particularly tough issue to deal with. “The Greek Tax administration is falling short of targets and is not well placed to meet end-2012 benchmarks,” the report said, but despite pointing out that failure, it said that Prime Minister Antonis Samaras is committed to doing something to change it, although he hasn’t yet.
While he has barely mentioned tax evaders until now, Samaras endorsed a new spending cut and tax hike plan that is aimed squarely at those who do pay taxes, primarily workers, pensioners and the poor. A new simplified tax system puts a tax rate of 42 percent on middle-class families earning more than 42,000 euros ($55,000) a year.
Last week, the Greek government proposed legislation for a simplified tax system by which people earning more than (EURO)42,000 ($55,000) per year will now be taxed at a new top rate of 42 percent. Under the new guidelines, the 42 percent top tax rate and earnings threshold replaces the previous level of 45 percent for incomes above 100,000 euros ($130,770).
There are currently eight tax brackets ranging from 18 percent to 45 percent. These will be replaced by three tax rates: 22 percent, 32 percent and 42 percent. For years, Greeks have been complaining about the uncertainty created by an ever-changing tax system, arguing it undermined compliance and revenue as tax rates could change during a year. Tax evasion and corruption has long been a major problem.
(Source: AP)
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