ARCHANES, Greece — The tax inspectors swept into this picturesque village in Crete during the middle of a saint’s day celebration recently, moving from restaurant to restaurant demanding receipts and financial records. Soon, customers annoyed by the holiday disruption confronted them. Pushing, shoving and angry words followed, and eventually the frightened inspectors were forced to flee.“People are so angry and so poor,” said Nikolis Geniatakis, who has run his restaurant here on the main square for the last 34 years and who watched the confrontation from across the street. “What were the tax inspectors doing here? Why aren’t they going after the big fish?”
If Greece is ever going to get its public finances in order and escape grinding budget austerity, it will have to do a better job collecting taxes. For years, economists have pointed to rampant tax evasion as one of the country’s most serious problems, depriving the government of money it badly needs.
But as the confrontation in Archanes shows, the effort to collect taxes has not gone well; having inspectors run out of town is hardly evidence that the rule of law is taking root in the Greek economy. Rather than instilling a sense of fairness, the more aggressive tax collection program in some ways appears to have aggravated the problem. In particular, attempts to cast a broad net have only fueled public anger at the wealthy, who are often seen as the main culprits.
In the early days of the economic crisis here, Greek officials optimistically predicted that tax collection would soon improve. They bragged of using aerial photographs to get tax evaders who failed to declare their swimming pools on tax returns as required. They zeroed in on doctors who reported low incomes but who somehow paid high rents in affluent neighborhoods.
But despite such headline-grabbing efforts and an astonishing number of new tax laws (22 in the last two years), some question whether the authorities are actually making progress. At the end of 2011, tax arrears totaled 45 billion euros, or about $62.1 billion. At the end of 2012, €56 billion, or about $77.3 billion. At the end of July, with the most active tax period to come, the arrears had risen to €60 billion, or almost $83 billion, equivalent to nearly a fifth of the government’s public debt.
Experts say many of the tax collection measures are not effective, especially those aimed at the rich. Taxing yacht owners, for instance, only encouraged them to moor their boats elsewhere, emptying Greek marinas.
Efforts to overhaul the tax system, many accountants say, have created such a confusing jumble of laws that it will take months, if not years, to understand them. Consolidating and reorganizing the tax bureaus, intended to save money in the long run, has created an administrative nightmare in the short run, with files arriving months after a move, if at all, union officials say.
But perhaps as troublesome, some experts say, is the growing grass-roots anger that led the customers to turn against the four tax inspectors recently in Archanes. Tax collectors have been threatened or chased out of many towns, union officials say, though only a few cases, like the one here, get much attention.
For Mr. Geniatakis, the arrival of the tax inspectors was the kind of showy government move that hurts the little guy but amounts to nothing. In these hard times, he and the other restaurant owners had pooled €1,000 each, about $1,380, for music and decorations, only to see their investment disappear with the crowds when the scuffle began.
“They are driving us crazy, but what about the Lagarde list?” he said, referring to about 2,000 tax evasion suspects with Swiss bank accounts whose names were turned over to Greek officials in 2010.
When a journalist, Kostas Vaxevanis, published the list last year, he was charged with infringement of privacy but was acquitted and is now being retried. So far, no one on the Lagarde list is facing legal action, though officials, answering questions in Parliament earlier this month, said 150 audits were under way. But it remained unclear how aggressive the investigation was.An article in Eleftherotypia recently reported that the Lagarde list investigations and other high-profile cases were about to be moved from an elite auditing unit to local tax offices. Such a move, the newspaper said, would effectively end further investigations because the tax offices lacked the skills to quickly handle them. The paper quoted a senior finance ministry official as saying too much time had been wasted on investigating past fraud and that the focus should now be on new cases. The Finance Ministry issued a brief statement denying the story. The next day, it asked Parliament to extend the statute of limitation on tax evasion by two years.
But the lack of visible action is one of the reasons many Greeks cite for their disdain for the tax collection efforts. Accountants say efforts to overhaul the tax code also have failed. “The goal was a simplified system,” said Antonis Mouzakis, a prominent tax accountant in Athens. “But what we have got now is not simplified. It is a mess.”
Anna Apostolou, an accountant who works mostly for small-business owners, said many of her clients just refuse to pay or turn to the courts, knowing that will tie up payment for years.
“They are so furious at what they see,” she said. “They have just decided they will not pay. If they are fined they will not pay.”
In the past, Greek authorities derided the country’s tax collectors as lazy and corrupt, blaming them for many of the problems with the system.
But in recent months, the union has begun to fight back, speaking out on a number of issues and starting a poster campaign telling citizens that the collectors are not at fault.
Tryfon Alexiadis, the vice president of the tax collectors union, said he wondered whether his bosses even want the system to improve. Mr. Alexiadis pointed out that Greece has only 0.87 auditors for every 1,000 citizens, compared with Germany’s rate of 1.36 and Belgium’s 2.67.
Until recently, only nine auditors were assigned to a list of 54,000 cases involving money sent abroad, even after 24,000 of those cases were deemed likely to involve tax evasion, he said. After they protested in September, the number of auditors was raised to 50. The Finance Ministry said recently in Parliament that two audits have been completed so far.
In the end, Mr. Alexiadis said, the small guy gets hit hard simply because he is an easier target. “It’s not a conspiracy to get the small guy,” he said. “It’s just that they don’t have lawyers or friends to make phone calls to the politicians for them.”
To be sure, there have been some high-profile arrests in the last year. But many Greeks have little confidence that any of them will add up to much. In most cases, the wealthy have spent only a day or two in jail before being released.
Haris Theoharis, Greece’s secretary general for public revenues, agreed with some of the union’s arguments, including that there are too few auditors. But he said that he was also confronting a resistant bureaucracy. Auditors insist on a full audit, he said, when settling for the basics and moving on would no doubt yield better results.
Next year, Greek officials will also have to give up on one tax collection system that has worked well so far: attaching property tax bills to electric bills. The courts have ruled that the threat of losing electricity is illegal.
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