Suddenly, public revenues stage spectacular recovery

The most recent encouraging development in Greece’s public finances – making the government optimistic it will attain its target of lowering the deficit to below the prescribed 3 percent of GDP this year – is the satisfactory level of revenue collection. So much so that senior economic analysts at Alpha Bank have taken the view that if this performance is matched by a containment of expenses, the deficit may come in at lower than the 2.6 percent envisaged by the budget. This encouraging development, in contrast to last year’s performance, is neither the result of any miracle nor the imposition of new taxes. It is, instead, due to hard and systematic work, particularly on the part of Deputy Finance Minister Antonis Bezas. His organizational measures seem to have revived the tax collection mechanism and the battle against evasion has begun bearing fruit: Until last autumn revenues were rising at a rate of 4-5 percent. The recovery, which began in October, was reflected in a 12.8 percent rise, with 9.64 percent in November and 15 percent in December. The turnaround has continued this year at even more impressive rates: 17.8 percent in January, 14.4 percent in February and 13 percent in March. Overall, in the first quarter, the rise was 15.5 percent against an annual budget target of 7.7 percent. This is particularly encouraging as the first quarter is the driest period for revenues. Bezas and his senior minister, Giorgos Alogoskoufis, are considering additional measures against tax evasion, including the proposal by former opposition PASOK party minister Alekos Papadopoulos that all transactions among enterprises and the self-employed be conducted via bank accounts, which could be much more easily monitored by tax authorities. The measures adopted so far include: – The setting of quantitative targets in weekly inspections for the first time in tax offices throughout the country. – Annual targets were set for customs posts throughout the country which are monitored every two months. – Regular checks are continuing on large listed companies, firms issuing bogus invoices and those with large credit balances. – Many revenue loopholes were closed, for instance, the abolition of free entry through the northern customs posts of Niki and Doirani for goods subject to the special consumption tax and the banning of sale of duty free gasoline by Duty Free Shops and customs posts. – The technological modernization of the tax department has allowed cross-checking of taxpayers’ asset and income data. The online TAXIS system has been vastly upgraded.