Greece losing €60bn a year in unpaid tax, report reveals
Published 18/11/2011 | 05:00
The Greek government is losing out on €60bn of revenue because of unpaid taxes, with €30bn of it tied up in hundreds of thousands of court appeals, a report has found.
The money dwarfs the €54bn in tax revenue actually collected last year in Greece, and the amount involved could cover the government's deficits for the next three years.
The report, compiled by a special EU task force sent to dig the country out of an administrative morass, said some of the 165,000 court cases had lasted as long as 12 years.
The government was hoping to recover between €6bn and €8bn in back taxes by targeting large corporate tax evaders and tackling the backlog of court cases, the task force said.
Finance officials from France, Germany, Britain and several other EU states have already offered their experts to Greece to help them modernise tax-collecting methods and set up an out-of-court appeals system.
Greek authorities will also target offshore savings by drawing up a tax agreement with Switzerland, where the task force said "vast amounts" of Greek money was channelled.
Brussels is currently advising the recently installed government of former ECB vice president Lucas Papademos on the tax accord, which will have to comply with EU law.
The task force was set up as part of a second bailout deal for Greece and will stay in place for up to three years to help the country end what it says is an "excessively litigious" culture and overhaul a public sector that "generates the conditions for corruption".
It has around a dozen officials in Greece, and others in Brussels, whose main task it is to design reforms and help Greece spend €14bn in funding left under the current EU budget.
The money will go towards 100 priority projects including a massive solar energy plant and five dormant highway projects, while €2bn will be funnelled to small businesses via the country's banks.
EU officials said what is happening to banks in Greece was the opposite of what happened in Ireland, and that a deal to ask Greek sovereign bondholders to take a 50pc loss on their holdings -- a condition of the second bailout -- would have knock-on effects for lenders.
"In the Irish case, the banks brought the sovereign into difficulties, in the Greek case the sovereign brought the banks into difficulties," an official said.
"Clearly the higher the private sector involvement which the Greek banks have to provide, the greater the difficulties they will face."
Greece has debts of around €350bn and its budget deficit is projected to reach almost €19bn this year.
The country is poised to enter its fifth year of negative growth in 2012, with the economy expected to shrink by 2.8pc after a 5.5pc contraction this year.