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Anastasia Balezdrova

The extension of the deadline for tax returns submission, announced by the Finance Ministry, expires today. The end of the initial term was left for until after the election campaign, which however, turned out to be not just one, but two in number, because Greek politicians decided that the sharply increased taxes this year would frighten voters before they go to the polls.

The term expired and the Finance Ministry prolonged it, as usually happens almost every year. However, according to analysts, so far about 500,000 returns have not yet been submitted. It is almost impossible the electronic system to accept them all within a day and therefore the ministry is considering the option of granting a "silent" delay, i.e. to leave the system open in order to allow the last taxpayers to submit their returns over the next few days.

At the same time all these postponements cause a delay in the estimated budget revenues. GRReporter contacted for comment tax expert Antonis Mouzakis.

Mr. Mouzakis, what are the reasons for citizens to postpone the submission of their tax returns?

Many of them haven't managed to collect the necessary documents. For example, pensioners who were gathering their certificates from the insurance funds until the last minute. Another category of taxpayers are those who believe that thus they will postpone the deadline for paying their taxes. Of course, this is not true. A third simply has no intention of submitting a tax return, because they believe that in this way they protest against the "unjust taxation". To all this one can also add the general rule that Greeks like to postpone things until the last minute. So the Ministry of Finance doesn’t want to grant a formal delay namely for this reason.

The deadline for submission of tax returns is in any case very late compared to previous years. How does this affect state revenues?

It causes a huge problem in the implementation of the budget, because tax revenues will come into the Treasury later than expected. If the Ministry of Finance states that the tax can be paid in several instalments, a large portion of the funds will be transferred for payment next year.

At the same time government spending is strictly fixed, so if tax money isn't collected, the state won't be able to cover the expenses. This will increase the budget deficit, which is one of the main problems of the Finance Ministry. As you can see, the ministry is constantly trying to plug holes with various new taxes. This way we are turning around ourselves without a result, like a dog chasing its own tail without ever catching it.

According to some commentators, the government avoids imposing the measures to limit government spending, because they fear that if these measures are released, some people will not submit their tax returns at all. What is your opinion about this?

I don't think that the decision of an individual not to declare their income is in a position to put pressure on the tripartite coalition's decisions. Ultimately, even if 100,000 people decide to do so, it will be nothing more but a protest. And of course, it would affect only the people themselves.

The pressure comes from somewhere else. Before the elections, all parties, including those involved in the government coalition, had promised that there would not be more reductions in wages and pensions, and they are more than necessary, because otherwise the account books won't add up. Now they fear that if they impose such reductions, they will be accused of making false promises.

Tax expert Antonis Mouzakis

Yesterday it became clear that the Office against financial crime is investigating 200 people, because they have transferred huge sums of money to foreign banks while they have declared minimum incomes. What is the illegal part in this case?

There is a law under which banks and even companies - suppliers of electricity, water and similar services, are required to provide the Ministry of Finance with data about all their clients. The aim is to verify the financial operations of the taxpayer. Data from tax returns, which are stored in the ministry, are compared to the money in the bank accounts and transfer operations to foreign banks.

During such a verification, control authorities found many cases of citizens, who have declared small amounts of about 20 - 30 thousand euro, while at the same time they have transferred tens of millions abroad. What follows is to find out whether this money has been declared and taxed in Greece, unless it is in the category of income not taxed by law. If it is determined that they haven't paid taxes on these funds, a punitive tax will be imposed, which in some cases reaches 45 per cent, together with all legitimate interests. In addition, to some of the offenders, it is not excluded that legislation be triggered against the legalization of money from illegal activities.

Is the current tax system effective and what are your suggestions for its improvement?

Our tax system is not only ineffective, but also very slow and complicated because of the maze of various laws, which are constantly changing. New laws are issued, which supplement, correct or cancel previous ones, and this creates difficulties. The result is that nobody trusts the state. Neither local businessmen, nor, and even less, foreign investors.

If we don't manage to create a new tax system, which is simple, fair and is not constantly changing, we won't be able achieve anything. This should be the goal of the Finance Ministry and the government.

I think this time of crisis is the greatest opportunity to introduce a new law, which will change all that applies today and will create a new tax environment. This way everyone will know what taxes we pay, what are the conditions, without unpleasant surprises, as has been happening in the last few years.

Tax evasion and the responsibility of the political system

According to the tax expert, the biggest problem is tax evasion. "Fighting it, however, cannot be done only by promises, but concrete measures are needed. Yet in Greece clientele ties are very strong and whenever measures are mentioned, which will affect relatives or friends though, politicians always yield and withdraw them. The response was to increase taxes of ordinary taxpayers, who declare their real income. But it is not possible to chase people with small obligations which they are struggling to pay, and to leave others with higher incomes because either they stand higher in the social hierarchy, or simply have the right friends. If people see that the government starts persecuting people with high living standards, who declare minimum incomes, it will be much easier to adopt the measures, however serious they may be."

Antonis Mouzakis drew attention to the fact that there are not enough employees who deal with collection of taxes because many have retired. "The rest of them are young people who lack sufficient experience in conducting tax audits. So it is crucial that these people be trained, especially in the use of new technologies."

An indicator for the performance of the tax system was the information, which leaked earlier today, that one in six taxpayers still hasn't paid the first instalment of their due tax.