ECONOMY

Focus on big tax cases, says IMF

The team of economic experts from the International Monetary Fund (IMF) that is visiting Greece in order to draw up its annual report on the economy has recommended changes in the way tax authorities inspect enterprises to check their books. In a nutshell, the IMF team has told the government to curtail detailed inspections and focus on sample visits in order to ascertain the taxes that must be paid more quickly. Detailed inspections should be left to known cases of extensive tax avoidance and/or fraud. The IMF also recommends that since the government has decided to securitize debt that is overdue it in order to reduce the budget deficit and make up for uncollected revenues, that the tax authorities focus interest on collecting these overdue payments, which are estimated at 17-18 billion euros. As a percentage of annual revenues, these overdue payments are extremely high – five to eight times higher than in most advanced economies and on a par with economies in Africa and the former Soviet Union. These recommendations will necessarily require more personnel. The Ministry of Economy and Finance already plans a competition in order to hire 500 people who are to be employed collecting tax arrears. Despite the IMF recommendation to end the practice of forgiving part of past tax debt and to settle cases by giving tax dodgers the opportunity to pay that debt in several installments, the government prepares to extend that measure to some 100,000 enterprises. The IMF is expected to submit its report on the economy, in which it will recommend more and faster privatizations, to Economy and Finance Minister Giorgos Alogoskoufis this week. Alogoskoufis yesterday had a meeting with the executive committee of the General Confederation of Greek Labor (GSEE) in which all three deputy ministers, Petros Doukas, Christos Folias and Adam Regouzas, participated. At the meeting, Alogoskoufis rejected the GSEE demand for a subsidy of 300 euros for people earning less than 11,000 euros per year in order to help them meet the cost of higher heating oil prices. The amount was calculated by GSEE’s affiliated Labor Institute by comparing last year’s prices with the current prices. GSEE also asked the government to agree with a timetable for the convergence of wages with the average of the old 15 European Union members (meaning, excluding the 10 newcomers who joined last year) and remarked that the social insurance system will face financing difficulties beyond 2025. Alogoskoufis gave no specific answers but appeared favorably disposed to examining the proposals. «The government wanted to give the appearance of a consensus and dialogue, trying in this way to diminish the workers’ fighting spirit,» said GSEE executive member Alekos Kalyvis. GSEE has decided to stage a rally on the day, not yet fixed, that the government will submit the 2006 budget to Parliament.