Brussels, 11/03/2015 (Agence Europe) - In Paris this Thursday, the Greek Prime Minister, Alexis Tsipras, will meet OECD experts and its secretary general, Angel Gurria, to discuss the reforms the Greek government, in place since the end of January, intends to apply.
As regards taxation, the reforms announced by Greece in a list sent to the Eurogroup show “a genuine desire to change, for the first time”, Pascal Saint-Amans, the director of the OECD's Centre for Tax Policy and Administration, told EUROPE. Amongst other things, Saint-Amans stressed that the Greek authorities have identified the VAT issue, but explained that he would have liked to have seen greater emphasis being laid on the international and offshore dimension of tax fraud and tax evasion.
Domestically, much remains to be done. The European Commissioner for Economic and Financial Affairs, Pierre Moscovici, has been brought up to speed very quickly by his teams: the Greek tax administration is still not worthy of a developed country.
Upon its arrival in Greece in 2011, the Commission's task force described a tax administration amongst the least effective and most dysfunctional the Washington-based institute ever encountered. Individuals close to political parties holding strategic posts in the tax administration, multiple cases of corruption and public services lagging behind are all part of the fragile equilibrium of a country living beyond its means.
On fuel trafficking, a major problem in Greece, none of the governments in place so far have ever asked for any technical assistance from the task force, which can only intervene on request of the Greek authorities. The practice is crude, but highly effective: for instance, fuel intended for boats, which carries no tax, is put into the normal fuel system and the differences pocketed. It is believed to be the work of major shipowners, retailers or petroleum companies “who have the means to make their voices heard and networks with historical links to the principal political parties in Greece”, a source familiar with the dossier explained. George Sourlas, a senior official in the Greek Ministry for Justice, recently told Reuters that the traffickers had links to “all the political parties” in Greece.
On tax evasion by wealthy individuals, the task force has started to provide technical assistance, but has noted no real continuity in the action or as many answers from the Greeks as in other areas. The implementation of former Prime Minister Papandreou's action plan to fight tax evasion, which was drawn up in collaboration with the IMF in 2011, is lost in limbo. This is partly to do with the fact that the interlocutors have changed, but is also down to the fact that the Greek tax administration has had no boss for the last year. The task force therefore had no continuity in political management and impetus.
In June 2014, the Secretary General for Public Revenue, Haris Theoharis, suddenly resigned, going no further than to cite personal reasons (see EUROPE 11107). Very quickly, reports appeared in the Greek press of political pressure leading to his departure. The European Commission openly expressed its concern and the Eurogroup called Greece to account. According to a number of sources, Theoharis failed to show any “particular flexibility” when asked to name cronies of the government or in the tax treatment of its partisans. Secondly, kicking off a strategic plan in the middle of an election campaign was considered to have been a factor in the poor showing of the government then in place in the European elections. Under this strategic plan, the tax owed by many individuals was collected directly from their bank accounts. Theoharis was therefore reported to have been 'encouraged' to leave his job, as reported at the time by the Greek press.
The team selected by the Syriza government seems to be making a good impression. Panagiotis Nikoloudis, minister of state responsible for fighting corruption, is the former head of the financial intelligence cell and has a fairly good reputation. He will not be involved in tax administration but will be involved in the SDOE, which Greece wants to bring on board the administration, which in turn will be under more control from Nadia Valavani, the deputy finance minister. Dimitris Mardas, the deputy budget minister, will be tackling fuel trafficking, an area with which he is familiar as he wrote a thesis on the issue as a university student. He is quoted as saying that he hopes to claw back a billion euros a year by fighting this form of trafficking.
If there are any weaknesses in the new team, other than a lack of experience, a number of concerns persist regarding its operation in practice. It has also been pointed out that much of the Socialist network of Pasok has moved across to Syriza. In circles close to the government, there will be individuals attached to the former system, one source revealed. As for the insistence of the Greek finance minister, Yanis Varoufakis, to fight abuse regarding transfer prices, it has been noted that the fiscal fabric which escapes taxation is mainly connected to independent professionals and wealthy individuals. “Progress on transfer prices is not going to net the bulk of tax evasion”, the source explained. (Elodie Lamer)