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Higher fines and up to 10 years in prison will be part of the punitive measures threatening tax offenders that systematically break the law. This is what the Ministry of Finance has stated as it made a long list of individuals and companies of dubious income. The new provisions stipulate that severe penalties will be levied on all taxpayers who have outstanding debts to the state for more than € 120,000. Citizens who missed to submit their tax returns in previous periods, thus saving taxes of over € 15,000 will have to be very careful from 2011 on.

This news definitely made the public happy after the recent revelations of a few cases of famous Greeks who have accumulated millions of unpaid duties, taxes and fees over the years. This is also the case of the famous Greek performer of love songs Tolis Voskopoulos. It became clear that he owes the state around € 5 million and that he didn’t submit his tax return from 1993.  

Under the new provisions, if the economic police find three consecutive offences in a shop (including lack of a receipt issued for completed transaction), the incorrect trader can be punished with two months imprisonment. The other target of the tax authorities are the phantom companies that have no real activity but issue financial documents for unrealized transactions for VAT draining. According to publications in the Greek press, this is a widespread method for rapid earnings and violators will be punished with 10 years in prison as well as the accused of money laundering and smuggling.

The accumulation of huge deficit and the sate debt of € 300 billion proved to be good reasons the government to tighten the belts of the control authorities in the country at last. Informal economy in Greece has many faces – hiring people without securing them, declaring annual income lower than the actually received, corruption both in public and private sectors. It is an open secret that various governments have had a blind eye to reality for years. The government of George Papandreou has finally decided to stop or at least reduce financial crime in the country bound by the memorandum of financial aid.  

The sceptics in the country believe that the main reason for this determination lies in the idea of the government to gain more revenue into the Treasury as soon as possible as now it is significantly lower than the revenue planned in the 2010 budget. The results presented by the government show that there is a shortage of around € 770 million for the first half of the year to reach the targets set at the beginning of the year. Greek media, however, speak of a black hole in the revenue equaling € 2.6 billion for the first seven months of the year.   

This difference in planned and collected revenue worries the cabinet for sure despite the apparent calmness of its members. The Greek Financial Minister George Papakonstantinou gave an interview to the Bloomberg Agency. He highlighted in it the progress of the country and encouraged the purchase of Greek government bonds. He defined them as a good investment opportunity, not as something we should be afraid of. “As we look at the current situation we are confident that we will reach the goals set before us,” he assured.

Papakonstantinou will have a series of meetings with foreign strategic investors at the beginning of the next week to present the progress of the Greek reforms and the investment opportunities in the country. According to the official platform for the economic stability of the Greek government the government deficit at the end of 2010 has to be 8.1 % of GDP. It was 13.6% of GDP at the end of 2009. This means that the external debt of Greece continues to grow but at a slower pace compared to the last year. This is expected to be achieved through tight economic policies of cuts, higher taxes and more efficient collection of state revenues. The most recent data show that economic growth, however, continues to be negative and unemployment continues to grow. Financial analysts believe that it will be difficult for George Papakonstantinou to convince foreign investors that the Greek government bonds are a good investment unless domestic finance in the country are not put in order.