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Greece is a poor country with rich citizens

23 September 2011 / 21:09:11  GRReporter
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Today the Greek Ministry of Finance once again announced that it will assign the collection of taxes which exceed the sum of 150,000 euros from private companies and law firms. According to the decision of the Minister Evangelos Venizelos these companies are obliged to find any kind of property of debtors in Greece and abroad in order to meet their obligations to the state. 

In the social networks the 'news' was greeted with reservations regarding its success. Many Greeks commented that it is hardly difficult to find debtors, such as the football boss Makis Psomiadis, who few days ago was released after paying bail in the amount 20,000 euros. According to various sources the same person has declared to the tax office that his annual income is eight thousand euros! 

The inefficiency of the system for collecting taxes, combined with the widespread at all levels of state administration corruption forced the Ministry of Finance to resort to the services of private firms. In its report the German magazine Stern describes very clearly all derivatives of this problem. 

The article begins with the statement that "Greece is threatened by bankruptcy, but the rich take their money abroad. Politicians are raging, civil servants do not know what to do and the poor are paying for everything." 

When the second biggest ship owner in Greece George Prokopiou was chased by the tax authorities, his case was described in the media with capital letters, and for the first time it seemed that the government's election promise, that the burden for the salvation of the country will be borne by all Greeks, was being followed. 

But according to unnamed sources from the National Intelligence Service, just two days after the tax authorities called him to settle his obligations, he transferred 600 million euros to Switzerland. It was something as a warning from the billionaire, suggesting that it would be better to leave him alone because he can take all his activities outside Greece. 

This shows, as Stern writes, that things are the way they were before: The people must save, while the ones who have money and connections are not afraid of anything. 

On this occasion, the President of the Institute for Economic and Industrial Studies Yannis Stournaras said: "We are a poor country with rich people. And these rich do not pay taxes because there is no political will to do so. The clienteles system continues to act here. Interests of politics and business are closely related, so politicians do not want to change things." 

Only a year ago Yannis Stournaras was optimistic that the authorities will find debtors who evade taxes with the help of satellite images of houses with swimming pools and by disclosure of the names of doctors and lawyers, who pay lower taxes than their cleaners. "But they did not catch not even one “big fish". I did not hear of anyone to be convicted. The entire burden falls on the shoulders of middle-class people and that is unacceptable. It is a poison for society which will demand retribution." 

In turn the responsible for the discovery of debtors Secretary of the Treasury Diomidis Spinelis said: "We are fighting on many fronts. Collecting taxes is accompanied by much sweat and blood." Spinelis creates an electronic control system that can compare data from different tax returns. "We are working for three days without sleeping. It is not always easy to move your employees." 

He told the magazine that he was forced to lay off 200 staff members, who could not follow this rhythm of work because of family obligations. The rest receive much lower wages, while doing more work. But the goal is worth it. The Spinelis System found several debtors and initiated the procedure in local tax offices. But, as he says: "The collection is not my job, I do not know what amounts are." 

According to official figures, 20,000 freelancers have annual revenues of over 100,000 euros, but only 73 of them are taxed on income that exceeds one million euros. The majority of about 700,000 do not pay even penny because they declare annual income of 12,000 euros. 

Professor of Economics Savas Rombolis estimated the losses from tax evasion by the self-employed at around 15 billion euros per year. Even this amount alone would be sufficient for the annual state debt. Taxes from shipping and tourism can contribute a further 20 billion euros. And although in other circumstances the situation in Greece could be as good as in Sweden, the authorities cannot collect a solid amount. 

As regards to the fight against tax evasion, the Director of the Office for prosecution of economic crimes Nikolaos Lekas ​​says: "Greece is determined not to bankrupt. Now we strictly apply all laws." At the same time he shows a list and says, "Here's a doctor. Within seven years, he has paid a total of 172,000 euros in taxes, and his bank account has 5.5 million euros." 

The new Director follows the steps of his predecessor Yiannis Kapeleris who at the beginning of the crisis, told the media that the party and the times in which debtors seek support from parliament members and finance ministers is gone forever. Many Greeks believed him, because it gave them courage. The media also responded positively. 

Kapeleris was promoted to Chief Secretary of the Ministry of Finance. Now he is dealing with a group of 1,700 citizens who have property worth one billion euros. "Only in 19 cases there is liability to the tax authorities in the amount of 76 million euros. We are determined to change many things, but we need time. We must change the entire system for collecting taxes. It makes me feel extremely uncomfortable to know how large the volume of unpaid taxes is when the middle-class suffers from their increase. We are making progress but still we have not reached the level from which we can collect money from those who have them." 

Nikolaos Lekas ​​fired 70 percent of the 1,200 employees of the Office for prosecution of economic crimes. "They were here for many years and were friends with their clientele too." Many of the new employees have to follow intensive computer courses. According to him they will be able to enter bank account and "freeze" them without having special permission from the court as they do now in the tax offices. 

According to economist Yannis Stournaras Greece is losing a historic opportunity. "Such opportunity only comes once. But the Prime Minister looked at the issue superficially and appointed his friends (naive youth) to senior positions." They promised to send all debtors in prison, but remained only with the threat. "They did not have the resources to implement these requirements. The rich have good lawyers and smart advisers" as a result of which many offshore companies appeared, yachts were registered in Turkey and money transfers were done to Switzerland, where in the Greek accounts, there are about 600 billion euros. "And the party goes on," says Stournaras. 

The island Mykonos moves in a very distant rhythm from the crisis. As one restaurant manager says: "There is no crisis on Mykonos, there is no crisis for us as well." There influx of customers is so large that sometimes necessary is even a ministerial intervention to ensure a sun bed on the cosmopolitan beach. 

Still, scandal was registered on the island. Inspectors from the Ministry of Finance found that in July 2009 the owners of a club did not issue invoices for 1500 tickets for the concert of singer Antonis Remos, but they were included in the accountant’s books. And although the fine should have been in the amount of 2,000,000 euros, the local tax administration reduced it to ten thousand euros. The case obviously was lost in the labyrinth of Greek justice, notes Stern magazine. 

"The system leads people to the judicial path when they receive notes, which say they owe large amounts," says lawyer Leonidas Hamodrakas. "But in order for the procedure to start it needs from six to eight years. The state rarely manages to collect this money. In most cases it is not about corruption, but just about a missing effective mechanism, coordination and organization." 

At the same time it seems that notaries have a lot of work, since a large number of properties are being transferred to children or elderly people. Among the demands of clients are also transfers of luxury properties to offshore companies, mainly based in Cyprus. Thus, when the state sends a check for payment, debtors no longer have any property in their name. 

Greeks owe a total of 41 billion euros to the state in unpaid taxes. Recently a list was issued of 8000 companies along with 6500 citizens who owe 90 percent of the total. During his election campaign, Prime Minister George Papandreou was showing this list saying "There is money." Now even the pro-government newspaper Ta Nea defines the list as "ghost list", also states the German magazine. 

Inspectors are also after companies that have declared bankruptcy in the last 20 years. Lawyer Leonidas Hamodrakas represents a construction company that is listed because of obligations to the state amounting to three million euros. "The company however has declared bankruptcy in 1996. There is nothing they can take from it. Things are the same in most companies." 

According to Professor Rombolis the state is likely to be able to collect about eight billion euros from all obligations. "The government has no plan and state structures are the same as before. Even if someone manages to collect all the money, now worth 350 billion euros, after ten years the Greeks would be in the same situation as they are today. The reforms that the European Union is offering will make things even worse." 

Although currently there is a continuous increase in taxes, state revenues are decreasing and the economy is shrinking. Gross domestic product fell by 10.2 percent in the last 10 years and foreign investments fell by 38 percent. The budget deficit and unemployment rose and the government announced a new additional tax of up to 10 euros per square meter on the property, which is expected to be paid together with the electricity bills. 

In conclusion, Professor Savas Rombolis tells the journalist from Stern: "We need someone to clearly tell to all rich people that things will get worse for them as well if they do not contribute. If they do not do anything a day will come when the poor will set their houses on fire." 

Tags: Greece economy crisis debt tax evasion rich middle-class
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