Flawed measures

It was first implemented in Allende’s Chile: Citizens who submitted purchase receipts were granted tax breaks on the income they declared. To make things even more attractive, the state occasionally organized lotteries. The holder of the receipt with the lucky number would win a brand new car. Tax evasion, of course, continued unabated. No tax system, however fair or growth-inducing, is any good unless it can be enforced. Simplicity, clarity, organization are all crucial, justifying the claim that «tax policy consists in managing the taxation mechanism.» The conservative administration has nothing to envy its predecessors. It has failed in all the above respects. In fact, one of the first laws passed in the summer of 2004 acquitted those convicted of criminal tax violations. What followed was equally discouraging. Revenue collection services stood by idly as the illegal fuel trade grew to an annual 2 billion euros and fraudsters pocketed some 600 million euros. The latest news is comical: following two failed attempts, the government is re-introducing the measure of granting tax breaks to those who submit receipts. Yes, it’s a European take on the notorious Chilean model. That said, one would expect a different reaction from opposition leader George Papandreou. He should have said, for example, that were he to become premier he would not permit any tax amnesty. Or that he would seek to protect tax services against partisan expediency. Or that he would fight tax evasion among medium-size firms and farm enterprises, taking on those populists who promise to combat everyone else’s tax evasion. Unfortunately, we heard nothing but the usual pre-election sound bites.

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