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...likes paying taxes, but Greeks seem to have an especially strong aversion to handing over their money to the state. Dimitris Georgakopoulos, the man in charge of taxation at the Ministry of Finance, says the attitude dates back to the 400-year-long Ottoman rule over Greece, when people evaded taxes as a form of resistance. Ordinary Greeks point to a more immediate cause. "Everyone cheats," says lawyer Elena Tzanetakou, 29, as she rushes out of a tax office in Athens after filing paperwork for a client. "The system is corrupt and it always has been, so people think...
...there's good reason to doubt Greece will find any quick fix for its tax problems. Like other southern European nations, the country's culture of tax evasion is deeply rooted, woven into the very fabric of relations between the citizen and state. "Greeks love their country, but they don't trust it," says a small businessman who asked to be called Dimitris, saying he feared repercussion from the authorities if he gave his real name. "They tell us the state is broken. There is no money for health, for pensions, for education. On the other hand, we see people...
...those countries, tax evasion reduces state revenue. But to different degrees, says Tito Boeri, a professor of economics at Bocconi University in Milan, it is also a root cause of broader problems with competitiveness. "I think the serious problem this tax evasion poses is that it concentrates tax pressures on a small segment of the workforce," he says. "That is an obstacle and an impediment to growth." (See the worst business deals...
Cleaning up Greece's wasteful and corrupt state sector, and regaining citizens' trust, will take years. The government is pinning its hopes on increasing tax revenues. Some of that will come from new taxes on items such as luxury goods and fuel. But Athens also insists it can raise $1.67 billion in the short term by cracking down on tax evasion. The government has promised a radical reform of the country's complex and inefficient tax system and says a comprehensive new law, which is intended both to simplify the system and to spread the tax burden more fairly, will...
...will be difficult. Greece's tax-collection system is an antiquated mess. The state's various financial-information databases are haphazard and fragmented. No single program can pull up all the data about a single taxpayer; without tedious manual cross-checks, there's no way to flag the Kolonaki doctor who is declaring a pittance but living in a multimillion-dollar apartment. So decentralized is the whole system that until recently, Greece's government didn't even know how many people it had on its payroll. (See 10 things to do in Athens...