ECONOMY

Major drive against tax evasion

The government yesterday unveiled a major tax bill, linking the battle against tax evasion with efforts to increase spending on social services and alleviate poverty. «Tax evasion is a phenomenon that leads to serious social injustices… It is inconceivable that citizens do not pay their due taxes, because this money is returned to society – particularly those who need it most. Tax evasion, therefore, is a highly anti-social behavior,» said Economy Minister Giorgos Alogoskoufis in his presentation to the Cabinet. He said government policy on the issue revolved around three axes: First, efforts to change the attitudes of citizens and tax officials toward tax evasion. Second, increasing the effectiveness and objectivity of tax inspections. Third, the introduction of incentives to encourage citizens to ask for receipts. According to the new law, new businesses will be treated leniently by tax authorities in their first two years of operation, with officials acting in something of an advisory capacity – unless there are clear indications of an intent to cheat. Fines will be reduced. At the same time, taxpayers asking for receipts from car repair shops, electricians, plumbers and painters will have 40 percent of the respective sums deducted from the total taxable income. The tax service will issue a leaflet setting out the rights and obligations of taxpayers and inspectors during inspections, the procedures involved and the fines laid down for specific violations. Firms that are repeatedly found guilty of tax evasion will be given priority for more frequent inspections. Local tax authorities will have less power to decide which taxpayers or firms to inspect – a greater number of selections will be done centrally. The bill also provides for the setting up of a National Council Against Tax Evasion, with the participation of representatives of labor unions, employers and political parties. This body will have the task of submitting recommendations, identifying provisions that create confusion or may be liable to misinterpretation and suggesting changes to the range of penalties.

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