Crackdown on Tax Cheats Athens Tries to Change the Greek Way of Life
Pushed by the EU and the IMF to boost revenues, the Greek government is getting increasingly ruthless in its fight against tax cheats and is even resorting to "name and shame" tactics. But it is still a long way from meeting its targets.
Greece's most exclusive beach club is the "Nammos" on the island of Mykonos, where the drink of the season is Mastiha, a brandy-based liqueur flavored with resin from the mastic tree. Konstantinos Tsakiris, 40, is gulping down a glass of Mastiha as he gazes out at the sea. "There's no crisis here," says Tsakiris, who is one of Greece's biggest ship owners and the principal owner of the Greek association football club Panionios Athens.
Luxury motor yachts and sailing boats are bobbing at anchor in the narrow bay of Psarou. The deckchairs at the Nammos are so coveted that many are booked in advance for the whole summer -- at 3,000 ($4,140) apiece. "You can do anything you want here, anything that's crazy and fun," says Tsakiris. He has the beginnings of a paunch, wears his hair short and has a large tattoo on his chest. Next to him, a Lebanese construction magnate is pouring champagne from a 250 bottle onto the heads of his young female companions. The Nammos is the kind of place where tabloid reporters get their stories.
But the celebrity club has also been making headlines recently on the political pages. The Greek finance minister has ordered the club's owner to pay a remarkably large fine, even issuing a press release to make sure the public knows the exact sum: 3,972,930.
This is a new approach, and it isn't exactly in keeping with European data privacy regulations. But this is precisely the government's intent.
Reeducating the People
Greece is broke. To avoid a national bankruptcy, Prime Minister George Papandreou has not only cut public spending on pensions, civil servants' salaries and subsidies, but he has also raised property, sales and income taxes, increased the cost of gasoline, tobacco and alcohol, and raised other taxes on luxury goods.
But even all of these measures are not enough for the country's overseers from the European Union, the European Central Bank (ECB) and the International Monetary Fund (IMF). Last week, they criticized a law designed to collect back taxes, which will likely raise only 2 billion in additional tax revenues over the next two years -- a drop in the ocean compared with the estimated 35 billion in taxes the Greeks have failed to pay during the last decade.
Papandreou has begun an attempt to change the Greek way of life, a mentality that for years has had little to do with public spirit, but which has spawned a large shadow economy and a great deal of tax evasion and corruption. He has embarked on nothing less than an effort to reeducate his people.
The Papandreou administration says that the new measures will have a "sustainable preventive effect." The Finance Ministry wants to make it "unmistakably clear" to ordinary citizens who have been hard-hit by austerity measures that tax evasion and nepotism are no longer acceptable, even for the affluent.
'A Magical Night'
As a result, ordinary Greeks are now learning some previously unknown details about the lives of the country's rich and famous. One of the revelations involves an incident at the Nammos, which began with a concert given by the celebrated pop singer Antonis Remos.
On a balmy summer evening, Remos serenaded about 3,000 guests attending an exclusive dinner -- it was a "magical night," the papers wrote. But while "the celebrities and corporate elite were applauding Remos," tax investigators had gained access to the club through a back door.
What they found was -- absolutely nothing. Not a single invoice, "not one receipt," as the tax investigators told the press. But when they took a closer look at the club's books and the owners' bank accounts, they did find something, in the shape of 4 million that was unaccounted for.
The club's owners read about the consequences of the raid in the papers. They read about the "massive fine" and the certainty that from then on, they and all of their other businesses were going to find themselves "in the tax authorities' crosshairs."
The same also applies to their less affluent fellow citizens. It is a hot morning and Angelos, an air-conditioning technician, is late for an appointment in Kato Alepochori, where he is supposed to repair the air-conditioning in a private apartment. Instead, he is standing in the blazing sun at a tollbooth on the outskirts of Athens, with his back to the shimmering waters of the Saronic Gulf.
Angelos was stopped by Finance Ministry tax investigators, who wait just past the tollbooths and, using red batons, wave vehicles to the side of the road. They have already hit pay dirt with the first vehicle, Angelos' van.
His delivery notes don't match the license for his van. The agents instruct Angelos to remove the license plate, impound the vehicle for two months and order his boss to pay a 3,000 fine. It is possible to challenge the fine, but the prospects of success are slim.
In December, the Finance Ministry established the Financial and Economic Crime Unit, which reports directly to the finance minister and is equipped with extensive powers. The inspections are expected to bring in at least 1.2 billion in additional tax revenue by the end of the year. The agency itself has set the bar even higher, at 5 billion.
- Part 1: Athens Tries to Change the Greek Way of Life
- Part 2: 'It's Not about the Money'