Survey Points To Rising Tax Evasion And Corruption In Greece

by Lorys Charalambous, Tax-news.com, Cyprus

11 June 2001

According to a recent survey conducted by the Foundation of Economic and Industrial Research (IOBE), tax evasion and the black economy (which is estimated at around 30% of the country's GDP) are the major factors responsible for the economic slowdown in Greece.

The survey, entitled 'The Black Economy and Tax Evasion in Greece' largely lays the blame for the high level of tax evasion on the country's complicated tax system, which allows people to duck under taxes fairly easily. 'The analysis showed that Greece's tax system differs considerably from other European countries,' the organisation said. 'It is very centralised and influenced by political developments.'

The maintenance of inflation at high levels in the past, the non-indexation of tax scales, and the resultant increase in the tax burden, have meant that income tax has been the worst hit sector in terms of the numbers of people trying to evade tax. Many Greek taxpayers manage to conceal significant chunks of their income by receiving payments in kind, such as rent, cars, or private healthcare paid for by their employer. The building and construction sector also came under fire, with the survey finding that people were evading tax by issuing bogus receipts with inflated expenses, and falsifying records of transactions and hours worked.

The survey blamed the relative lack of foreign investment in the country on high levels of corruption in public administration, singling out the health sector, town planning, and taxation departments for special mention. The conclusion was drawn that this, as much as the country's growing tax evasion problems, was the source of Greece's economic problems, as it has created upward pressures on public spending, and has had a negative impact on the distribution of income.

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