Greece’s Tax Evaders: A Crushing Culture

By Andy Dabilis

As part of a crackdown on tax evaders, Greek police arrested a 42-year-old man identified only as a chief executive officer of an unnamed company, on Wednesday (February 1st) and charged him with failing to pay 62.3m euros in back payments.

The scenario is not an uncommon sight in recent weeks, after repeated demands from international lenders putting up bailout money to save Greece from default a list of more than 4,100 names of tax dodgers was released at the end of January.

The government has set up special financial crimes squads and hired more than 200 investigators, including those skilled in finance, in trying to identify people believed to be tax cheats, but prosecution lagged, and until the crackdown, not one major tax evader had been arrested.

While the ministry last year said there were about 6,000 people owing 44 billion euros, the released list named almost one-third less and said the total was not quite 15 billion euros — much of it said to be uncollectible because of bankruptcies and debts too old to be chased.

But there were no famous names, nor top political or business executives as Greeks expected.

Heading the list was a 58-year-old accountant serving a long jail sentence for not paying taxes that, with interest, amount to 950m euros. He is one of the few being prosecuted for the crime that is commonplace in Greek society, from auto mechanics to street vendors to professionals.

Finance Minister Evangelos Venizelos said he is continuing to negotiate with Swiss officials to get the names of those who may have hidden assets in banks in that country, including politicians. The minister said the delays in producing the list were due to privacy violations, and legislation needed to be changed to make it happen.

However, even the recent arrests — which include a businessman who police said owed 62.3m euros and a 35-year-old woman who formerly owned a clothing store and was charged with failing to pay 48 million euros — haven’t convinced Greeks the government has gone after the country’s privileged rich elite.

“Tax evasion is deeply ingrained in Greece’s culture, a relic of Ottoman times when cheating the pasha was almost a patriotic duty. It is hardly patriotic when it pushes your county toward bankruptcy. The current round up of 50 sacrificial lambs is cosmetic,” former banker Alex Billinis told SETimes.

London School of Economics’ Paul Wooley Centre for the Study of Capital Market Dysfunctionality Director Dimitri Vayanos told SETimes that the problem goes beyond naming names.

“You have to organize the tax collection system better. There isn’t enough willingness or capability. It’s not just a matter of putting them in jail.”

Pantelis Kammas, a lecturer in economics at the University of Ioannina in northern Greece, said government policies encourage tax evasion because there are many self-employed people and small-and-medium-sized family businesses. Receipts are rarely given.

“This makes tax auditing policy really hard and requires a large amount of resources to be invested in tax detection policies,” he said.

Kammas noted also that people wrongly believe that high-income capitalists are the biggest evaders, and not middle-and-lower income cheats who go undetected.

“This part of society is … the so-called median voter. There isn’t a single Greek party that would pay the political cost of seriously fighting tax evasion.”