Schäuble Demands Reform Action To Secure Greek Bailout Deal

by Ulrika Lomas, Tax-News.com, Brussels

31 January 2012

Ahead of a key European Union summit meeting in Brussels focussing on stricter budgetary discipline, German Finance Minister Wolfgang Schäuble urged Greece to implement vital reform measures to redress the state finances, warning that failure to do so might result in the second euro zone bailout package being withheld, and ultimately in bankruptcy.

While underscoring Europe’s commitment to supporting Greece with a fresh bailout loan, Schäuble nevertheless stressed that unless the necessary fiscal decisions are implemented, there is absolutely no point in granting further financial assistance, arguing that “no amount of money” will solve the problem.

Schäuble alluded to the fact that eurozone taxpayers had already poured billions of euros into the Greek economy since 2010 to support the country, pointing out that they will continue to do so in future.

The Greek government’s apparent failure to tackle public spending and to improve tax collection have led to renewed political tensions among eurozone leaders, with mounting concerns over a heightened debt crisis in the region.

Germany recently mooted the idea of Athens transferring partial budgetary control to the European Union (EU) in return for financial aid, provoking outrage in Greece.

The government of Greek Prime Minister Lucas Papademos has, outwardly at least, visibly stepped up its efforts in the last few weeks and months to clamp down on rampant tax evasion and inefficient tax collection – one of the biggest problems currently facing the debt-ridden country.

As promised back in October, the government recently published a list of individuals alleged to have evaded taxes in Greece to the tune of almost EUR15bn (USD19.5bn).

At the time, Greek Finance Minister Evangelos Venizelos described tax evasion as a "national crime", which has resulted in a shortfall in tax revenues for the state of around EUR37bn. Venizelos confirmed that the state had successfully tracked down individuals said to have evaded over EUR1m in tax.

Revealing that Greek tax officials in collaboration with private companies would now endeavour to recoup the money, the minister also emphasized that a new task force has been set up charged with auditing the thousand biggest companies in Greece in terms of turnover.

In addition, Greece and Switzerland have reportedly initiated talks recently on concluding a deal to enable the government to track undisclosed accounts. Estimates of Greek wealth in Switzerland vary widely between tens of billions of euros and over EUR100bn.

The euro zone is to decide by March whether or not to grant Greece the vital second EUR130bn rescue package.

Recommended