Greece lag­ging in tax claims

Col­lec­tions of over­due levies aren’t keep­ing pace, hurt­ing debt re­duc­tion, EU says.

Austin American-Statesman - - BUSINESS - Con­tin­ued from B

ATHENS, GREECE — Greece is fail­ing to col­lect the tax it is owed and is in dan­ger of miss­ing key tar­gets that need to be met to re­duce the government’s stag­ger­ing debt pile, the Euro­pean Union warned Mon­day.

An EU task force help­ing Greece over­come the fi­nan­cial cri­sis that brought it to the brink of bank­ruptcy said Athens still has trou­ble deal­ing with old, out­stand­ing tax claims. With two months to go in 2012, it was still about a $1.32 bil­lion be­hind the EU tar­get of re­cov­er­ing $2.6 bil­lion.

In a report it said Greece made only 88 au­dits of large tax­pay­ers, well short of a 2012 tar­get of 300, and 467 of “high-wealth in­di­vid­u­als,” be­low a 1,300 tar­get.

Over­all, EU Vice Pres­i­dent Olli Rehn said Greece was nev­er­the­less tack­ling prob­lems “with de­ter­mi­na­tion and re­solve.”

Greece has been sur­viv­ing on res­cue loans from its part­ners in the 17-coun­try eu­ro­zone and the In­ter­na­tional Mon­e­tary Fund since 2010.

The cred­i­tors agreed just last week to pay out the lat­est batch of loans af­ter agree­ing to a se­ries of debt-re­lief mea­sures, such as low­er­ing the in­ter­est Greece has to pay on the loans and the com­ple­tion of a bond-buy­back scheme.

Rat­ings agency Moody’s warned that Greece’s debt re­mains un­sus­tain­able de­spite those mea­sures.

The con­tin­u­ing drop in Greek eco­nomic out­put, the agency ar­gued, made it “un­likely” the coun­try would be able to con­trol its na­tional debt “with­out fur­ther re­duc-

tion on prin­ci­pal.” That would mean that Greece’s ex­ist­ing cred­i­tors — mainly other euro gov­ern­ments and the IMF — would have to take a cut on their loans, some­thing they have so far ruled out.

In the short term, the dis­burse­ment of the next batch of loans will keep Greece from go­ing bank­rupt and trig­ger­ing more tur­moil in fi­nan­cial mar­kets.

Athens will get a to­tal of $64 bil­lion be­tween now and March, with $45 bil­lion paid up front in a trans­fer that a Greek government of­fi­cial said was com­pleted late Mon­day. The of­fi­cial only spoke on con­di­tion of anonymity, not be­ing au­tho­rized to dis­cuss the is­sue with me­dia.

In re­turn for the money that will see Greece through the win­ter months, the coun­try had to com­mit to fur­ther aus­ter­ity mea­sures, in­clud­ing more spend­ing cuts and tax in­creases that are set to ex­tend a re­ces­sion that started in late 2008.

With un­em­ploy­ment top­ping 25 per­cent, the government Mon­day ex­tended a freeze on the re­pos­ses­sion of most pri­mary homes through 2013.

Tax­a­tion is a par­tic­u­larly tough is­sue to deal with. “The Greek tax ad­min­is­tra­tion is fall­ing short of tar­gets and is not well placed to meet end-2012 bench­marks,” said the quar­terly report from the EU task force, which aims to help Greece im­ple­ment its re­forms.

The report did in­sist that the new government of Con­ser­va­tive Prime Min­is­ter An­to­nis Sa­ma­ras was strongly com­mit­ted to over­all tax re­form.

Last week, the Greek government pro­posed leg­is­la­tion for a sim­pli­fied tax sys­tem by which peo­ple earn­ing more than $55,000 per year will now be taxed at a new top rate of 42 per­cent.

Tax eva­sion has been a ma­jor prob­lem in Greece and other coun­tries hit by the fi­nan­cial cri­sis.

In Spain, where tax fraud is ram­pant, as much as $115 bil­lion is lost each year to tax fraud — the equiv­a­lent of the coun­try’s na­tional debt, ac­cord­ing to Spain’s main tax in­spec­tors’ union.

Tax eva­sion of all types in Italy ev­ery year to­tals about $300 bil­lion, tax po­lice es­ti­mate.

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