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Victoria Mindova

Earlier this week, a new scandal broke out due to the revelation that a doctor had "forgotten" to declare to the tax authorities almost four million euro for the period from 2008 to 2011. The doctor is a famous "ear-nose-throat" specialist with a luxurious office in the expensive metropolitan district of Kolonaki and his customers are local showbiz stars as reported by Greek media. He, like many other of his colleagues, for many years had been declaring incomes close to the non-taxable minimum, although he had a successful private practice. This is one of the few cases which disclose the avowed violation of the law and it is also an example of the rampant tax unfairness in Greece.

With the worsening economic situation in the country, the fight against tax evasion and the fair distribution of the tax burden have become the first priority of the government. Regardless of the loud promises to tackle tax unfairness, it remains one of the weak points of the Greek public administration.

In the sixth year of recession, the state has used every opportunity to lay a tax on the income and property of taxpayers, but it still cannot cover the difference between budget revenues and expenditures. At the same time, ordinary citizens continue to resent that only honest taxpayers who declare the full amount of their income are paying the cost of the crisis and that little is being done to resolve the problem of tax unfairness regarding the self-employed.

This is also the assessment of the situation in Greece by European Union Commissioner Algidras Semeta, who visited the country this week. He said to the National Assembly, "The two main areas in which we have focused the technical assistance to the Greek government are the improved collection of obligations and the effective audits of wealthy taxpayers. I'm afraid that the improvement in these areas is still slow."

A year after the signing of the Memorandum of financial support, the European Commission sent a group of experts (task force) to provide technical assistance in reforming the state administration. Semeta stresses that over 40% of the time that European bureaucrats have devoted to improving the procedures in the public administration has been related to the optimization of the performance of the tax services. However, real improvements in the operation of the tax system have not yet been observed. At a press conference on the results of the visit, we asked Semeta whether, in his opinion, the lack of political will is the reason why the tax system in Greece remains ineffective.

"I would not say that there is no political will. The meetings with the Minister of Finance have shown a clear desire for reforms. The creation of the special position of revenue secretary is a step in the right direction but the management of regional tax offices and of the tax administration as a whole should be improved," Algidras Semeta answered GRReporter.

He is firm that Greece has already mastered the larger part of the legal framework which regulates the improvement of revenue collection. It now remains for the law to be applied in practice, which has always been a problem for the Greek administration. In his opinion, the staff in the tax services needs technical time in order for it to be trained to carry out effective checks and to quickly identify possible violations.

"Although the economic and social situation in the country remains very difficult, there are obvious signs of improving confidence in the country in the medium term," the Commissioner said in Athens.

Recently, one of the most discussed issues in Greece has been the reduction of VAT on tourism services and restaurants. Representatives of the tourism and restaurant sectors insist on reducing the tax from 23% to 13% to support the tourist season. After their last visit, the foreign lenders stated that the issue could be discussed during the next inspection of the state of the Greek economy.

The supervisory Troika of the International Monetary Fund, the European Central Bank and the European Commission will return to Athens next week. Semeta stated he could not decide on the reduction of taxes because he was an ordinary employee within the system of the European Union. He explained that the final decision on the VAT reduction depended on the supervisory Troika and the government and that the proposal would be put on hold, as it seemed. "The tax policy of a country depends on the fiscal resources in the budget," said Semeta, implying that tax reductions could not be expected if the money lost due to reduced incomes is not offset by another source.