Tax rebellion

State revenue last month was lower – for the first time in years – compared to the same month last year; and the situation does not look like improving in February. According to sources, the government’s economic policymakers are in a panic as the 2005 budget, like the one before it, is in danger of being way off target because of falling revenue. And all this in a year of EU-mandated fiscal austerity measures. Why is state revenue tumbling? An easy explanation is that the economy has slowed, businesses have liquidity problems, and shops aren’t selling so they don’t pay taxes. This is not a sufficient explanation, for despite the faltering growth rate, public spending rose by 2 billion euros compared to last year and consumption at current prices rose by a healthy 6.5-7 percent. So tax evasion must be rampant, first because New Democracy made the mistake of sending a message of impunity to the market before the elections, a message that PASOK-appointed tax office heads spread in the months leading up to their replacement. Those who have to pay taxes have not hesitated to snub written warnings that they will have their property seized by the state. In a recent announcement of the optional settlement of outstanding taxes, only those who owe small amounts, up to 500 euros, responded while the rest blatantly ignored it. Meantime VAT evasion has become the rule. «Those who don’t meet revenue targets will be removed,» Deputy Finance Minister Adam Regouzas told ND-appointed tax office heads, but the disaster cannot be undone. After promising to revamp the state, Costas Karamanlis should have started by shaking up the corrupt and disintegrating tax collection mechanism. In any case, there is still time to correct things if the government does not wish to convey the message that the people mostly favored by its victory were tax dodgers.

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