Greece’s Tax System Still Below Par
May 8, 2013 Taxation in Greece
Photo by caribbATHENS – Greece has not done enough to clamp down on tax evasion, and the country’s tax authorities are still operating inefficiently even after receiving significant international assistance.
Despite ongoing international assistance, Greece is still struggling to increase tax collections and to meet its fiscal targets, plunging the country into a downward spiral, according to a new report released by the International monetary Fund (IMF) earlier this week.
According to the IMF report, so far “…very little progress has been made in tackling Greece’s notorious tax evasion”, with wealthy taxpayers and the self-employed still routinely refusing to meet their tax obligations.
The lack of tax revenues is forcing the government to make cuts to expenditure and funding of public projects, and to increasing the tax obligations faced by pensioners and salary earners.
The IMF also added that at the current stage the government of Greece is left with a decreasing number of options for increases to personal taxation or for cuts to social spending, forcing it into a position of reducing wages of public sector workers and slashing welfare payouts.
While Greece has been granted technical support from international organizations to positively reform its tax authorities, not enough progress has been made and steps still need to be taken to ensure the efficiency and independence of the tax authorities.
The current shortfalls being seen in the operation of the tax authorities has been attributed to a “taboo against mandatory dismissal”, which has left the Greece’s tax administration with a large number of under-qualified staff, with no room or funding to take on newer more qualified inspectors and specialists.