Greek pledges rest on hard-to-keep promise of tax reforms

Thu Jun 25, 2015 11:26am EDT
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By Karolina Tagaris

ATHENS (Reuters) - When Greece's tax police squad raided a busy cafe-restaurant in an upscale central Athens district earlier this year, it discovered two cash registers and an elaborate system of issuing fake receipts -- at least 15,000 of them, over four years.

Four months later, the cafe has been shut but local tax authorities have yet to pin down the exact amount of revenue the business concealed. A date for a court hearing for one of the owners has not yet been set, police officials say.

The cafe's misdeeds are one of the more flagrant cases of tax evasion to emerge this year, but monthly reports by Greece's financial crimes units highlight just how common tax dodging is, from doctors to farmers to contractors and civil servants.

That, and the prevalence of small- and medium-sized businesses and the self-employed, as well as the sizeable shadow economy, shows just how difficult it is to crack down on Greece's corruption and tax evasion, which leftist Prime Minister Alexis Tsipras has made one of his priorities.

In May, a dentist who did not issue receipts hid 226,648 euros of income; a public sector worker concealed taxable income of 246,000 euros; and a caterer hid income totaling 1.3 million euros without being able to justify where it came from, according to the financial crime unit's report.

The unit does not comment on cases outlined in the report.

Tsipras's government has pinned its hopes for a cash-for-reforms deal with lenders on a series of tax hikes, hoping to avoid further painful cuts to wages and pensions after a six-year-long depression.

"The way they're trying to sell it is good: We won't cut wages and pensions, and we'll target the rich," said Aristides Hatzis, associate professor of law and economics at the University of Athens.   Continued...

People fill in tax forms inside a tax office in Athens, Greece, June 25, 2015.  REUTERS/Alkis Konstantinidis