ECONOMY

Hasty decision to scrap Financial Crimes Squad brings fiscal side effects

The government’s intention of abolishing the Financial Crimes Squad (SDOE) in its present form is causing problems to the state budget as well as to its more than 1,000 staff. Following an order by Deputy Finance Minister Adam Regouzas, a former tax official himself, SDOE has stopped inspecting firms and its replacement is not projected to be operational before next year. SDOE’s abolition had been promised by the ruling party before the election, on the grounds that it was overwhelmingly staffed on the basis of political party criteria and prone to corruption. At a meeting with SDOE staff yesterday, Finance Ministry Secretary-General Vassilis Stavrinos said he did not now how long the transitional phase will last and that inspections will be restricted to the distribution of goods. Senior SDOE officials pointed out that the suspension of preventive tax inspections will cause huge problems to budget revenue. They also urged Stavrinos to submit any evidence of corruption to public prosecutors. It appears that the suspension of inspections and the prospect of SDOE’s abolition has had undesirable side effects, leading to a mini-revolt among small and midsized firms. Many are refusing to issue receipts and have jacked up their prices. According to ministry sources, value-added tax revenue so far this year is down from the same period last year. Even though SDOE was not empowered to police prices, its presence alone worked as a deterrent, particularly at periods such as Easter, when consumers spend more. But the prospect of abolition is apparently making shopkeepers dismissive of inspectors, even in their now-limited capacity, and to refuse to produce the required documents. «The government has abolished you, go home,» SDOE staff have been told in several cases. Worse, the government does not appear to have made up its mind on the new body’s powers, or whether to proceed with the point system for tax inspections, introduced by the previous government on January 1.