Big tax dodgers targeted

The government is about to target big-name tax dodgers in an effort to collect much-needed revenue and gain political capital. Checks through the Finance Ministry’s General Secretariat of Information Systems have turned up 4,145 cases which, according to advisors close to Economy and Finance Minister Giorgos Alogoskoufis, involve «all the big names of the business establishment.» The decision was taken by Prime Minister Costas Karamanlis himself after he realized that the government’s ambitious target to raise revenue proceeds for 2005 by 11.4 percent over the previous year will never be fulfilled. Data from the first seven months of the year have shown revenue growing by just 3.7 percent over the same period in 2004. This risks keeping the budget deficit too high, perhaps about 5 percent of gross domestic product (GDP), making it impossible for Greece to keep its pledge to the EU to lower the 2006 deficit below 3 percent of GDP without deep, and unpopular, spending cuts. The government wants to cut the 2006 budget deficit to 2.8 percent of GDP and keep the 2005 deficit around 3.6 percent. It is estimated that the government will gain revenue around 1.1 percent of GDP in 2005 through the securitization of debt, a tactic which the ruling New Democracy party had denounced while in opposition as «creative accounting.» A similar «creative accounting» scheme will offer revenue equal to 1 percent of GDP in 2006. This is still not enough to meet the deficit targets. Cracking down on tax evasion is another option. Hence the scheme to shake down the biggest evaders. According to government sources, a secret corps of 15 to 20 tax inspectors will take up the task. «I need fighters, real mujahedeen,» Alogoskoufis is said to have declared. The inspectors are being briefed individually by Alogoskoufis himself and are expected to begin work next week. Skeptics deride the whole procedure as another PR exercise designed to hide the fact that most of the revenue to the state is paid by salaried employees. Government officials, though, insist the crackdown will be for real and will happen very soon.