Friday, June 8, 2012

Greek Tax Revenue Drying Up Fast

Liz Alderman of The New York Times had a shrewd article published on June 5, 2012 about Greece and its financial troubles.
  • The Greek government could be out of money as soon as July (next month!)
  • Greece may have to stop paying government salaries, pensions and for the delivery of imported fuel, food and pharmaceuticals,
  • Some Greek officials are advocating raiding funds supposedly earmarked for the country’s troubled banks.
  • Tax revenues and other incomes are drying up. Businesses have a high incentive "to avoid payint what they owe" in taxes. "Prolonged austerity is making it harder, not easier, for governments like Greece to become self-reliant again," Alderman writes.
  • The debt crisis is spreading to larger European nations such as Spain.
  • The Greek government is owed an estimated $45 billion in back taxes, "only a fraction of which will ever be recovered." Alderman’s article states:
"…. a team of inspectors recently prowled the recession-hit island of Naxos for tax evaders, [therefore] a local radio station broadcast his license plate number to warn residents."
  • Some high profile Greeks have been prosecuted for tax fraud to encourage others to file and pay honestly.
  • Salaries and pensions, both private and public, have been cut by up to 50 percent, so government revenue is down and consumers have been spending less – causing thousands of businesses to fail.
  • Bank depositors, frightened that Greece may leave the euro currency, are rapidly withdrawing their deposits.
Tax collectors got another potential lift recently when the government started enforcing a 1995 law that gives them access to bank accounts of suspected tax evaders.

But Nikos Lekkas, a top official at the financial crimes agency where Mr. Maitos works, said Greek banks had obstructed nearly 5,000 requests for account data since 2010.

"The banks delay sending the information for 8 to 12 months," he said. "And when they do, they send huge stacks of documents to make it confusing. By the time we can follow up, much of the money has already fled."

In the past two years, the agency managed to assess back taxes worth 650 million euros on 210 of the cases, he said. But only 65 percent could be collected.
  • The Greek government is also going after off-shore businesses of wealthy Greeks. Some officials expect an improvement in revenue collection when the entire taxation system becomes computerized. "a move that is supposed to be completed by the end of this year."
The entire article is on-line at:

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