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A drop in the ocean

November 24, 2011

Greeks owe their state upwards of 40 billion euros. For the first time ever, tax authorities have arrested top businessmen accused of not paying their taxes. Now the finance ministry wants to do more to catch evaders.

Greek Minister of Finance Evagelos Venizelos
Venizelos: the heat is on for tax evaders in GreeceImage: dapd

What's been happening in Greece over the last few days is something of a small revolution: top businessman George Petzetakis, head of the world's leading company in plastic pipe and hose systems, was taken into custody to face trial for tax evasion to the tune of two million euros.

And then the powerful publisher and television producer Kostas Giannikos was seen in handcuffs, likewise charged with tax evasion. And the Greek tax authorities say that further arrests are to follow.

Now Finance Minister Evangelos Venizelos has threatened to put all evaders on the chopping block - unless they turn themselves into authorities before Thursday evening and clear their debts.

Pogrom atmosphere 'poisonous to society'

Panayotis Petrakis, professor of economics at the University of Athens, calculates that the Greek state loses around five billion euros a year as a result of tax evasion. The new tough line taken by the finance ministry is thus a very welcome sign, he says, but it has at least one unpleasant side-effect.

"It is unsettling that there's a kind of pogrom going on, with people being arrested to make good headlines. This will poison our social climate," Petrakis told Deutsche Welle.

It would be much better, Petrakis argues, if the tax authorities would become more efficient - without having the need for headlines. If you don't pay your taxes in Greece, then you should face the law, he says. Is this not a self-evident principle in 21st century Europe?

But it's not only tax authorities which have to face their responsibility; just as important, if not more so, is the role played by Greece's political leadership . For it's up to the government to set the general framework for such measures.

In Petrakis' eyes, Greece's political system has stood in the way of its own survival and the fossilized structures of the state have prevented any national progress.

More empty threats?

Finance Minister Venizelos has been threatening for months to pursue tax evaders publicly. In mid-October he sad he would publish online entire lists of names "next week." That deadline, however, had to be postponed for data privacy reasons.

On Monday, he set Thursday as the final deadline for all tax evaders - or at least, every citizen owing the government over 150,000 euros in back taxes - to pay up. If they don't report to the authorities by then, they risk having their names published online.

Despite the urgency with which Venizelos has gone after evaders, observers like political activist Dionyssis Goussetis are still waiting to see action. "We're all waiting with our tongues out for the list of tax evaders, which is constantly being postponed. I wonder if this delay is to give evaders one last chance to settle their debts, or whether some people are trying to gain a little time to cover up their crimes."

Too often have Greek politicians issued similar threats in the past, Goussetis added, only for them to disappear: It's therefore "no surprise" that the black-market economy accounts for over 30 percent of Greece's output.

Conditional support

If anyone is feeling the effects of the debt crisis in Greece, it's employees on low and average income. Interim Prime Minister Lukas Papademos, who currently heads a grand coalition of conservatives and socialists, could greatly increase the people's support for unpopular austerity measures by asking higher earners and tax evaders to pay up.

But Papademos could still run into problems when trying to push such measures through his grand coalition, Goussetis fears: "It was one thing for the two peoples' parties [conservatives and socialists] to reach agreement on forming an interim government, but I don't have the feeling that they stand behind Papademos unconditionally."

a drop falling into water
The recent collection was a drop in the oceanImage: Fotolia/Jaroslav Machacek

Public opinion on the Papademos government is divided; whereas some speak of a government of "national recovery," others speak of a mere transitional government or even of a cabinet formed with future election campaigns in mind, says Goussetis. In other words: The same politicians who say openly that they stand behind Papademos are those who actually trip him up.

In any event, Venizelos' threat with regard to tax evaders has already begun to pay off. Ever since the ultimatum was announced, and since the arrests of top Greek businessmen, a number of petty tax evaders have turned themselves in, resulting in revenues of some four million euros.

Without a doubt it's a positive signal, but still a drop in the ocean for debt-stricken Greece.

Author: Jannis Papadimitriou, Athens / glb
Editor: Michael Lawton