Greece's Bottom Line: Too Many Tax Cheats The Greek government is vowing to finally crack down on tax evaders as the country faces crippling debt. But the new effort faces enormous challenges — from apathy and a culture of tax evasion to bureaucratic inertia and technical obstacles.
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Greece's Bottom Line: Too Many Tax Cheats

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Greece's Bottom Line: Too Many Tax Cheats

Greece's Bottom Line: Too Many Tax Cheats

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LINDA WERTHEIMER, host:

The precarious financial position of Greece is still shaking markets and affecting the euro. The Greek debt problem will dominate a European Union summit in Brussels today. The Greek government has announced austerity measures and it's promising to increase revenue by getting Greeks to pay their taxes. But as NPR's Eric Westervelt reports, that will not be easy.

ERIC WESTERVELT: Diomidis Spinellis has a spectacular view of the Acropolis from his Athens office. But the new head of information systems at the Greek Ministry of Finance these days has no time to admire the 2,500-year-old view. The 43-year-old computer dynamo is working overtime to install a new state of the auditing, billing and accounting system to track down tax offenders in a nation where tax cheating is nearly as common as jaywalking.

But there's a big problem: new auditing has taken a backseat to a fight over who provides the hardware.

Mr. DIOMIDIS SPINELLIS (Greek Ministry of Finance): Companies arguing whether they should be awarded the contract and fighting against each other.

WESTERVELT: How many years have they been arguing over the hardware?

Mr. SPINELLIS: More than two years. The software is ready but there's no hardware in which to run it, and these are problems.

WESTERVELT: It's just one example of the enormous challenges the Greeks face in overhauling a tax system that was not computerized until 2000. Even today, rural areas in Greece still rely mostly on paper records.

The government estimates that the underground, untaxed economy in Greece is nearly one-third of gross domestic product and accounts for billions in uncollected taxes.

Costas Bakouris with the anti-corruption group Transparency International says the Greek tolerance for tax cheating is high. He says the self-employed -carpenters, plumbers, electricians and the like - are big offenders. But the biggest, Bakouris says, are from high-paid white-collar professions.

Mr. COSTAS BAKOURIS (Chairman, Transparency International): For example, doctors, lawyers, architects and engineers who when they provide services, they don't give receipts unless they're asked for. And therefore if they dont provide receipts, they dont declare all their income, we say it's unacceptable, but then when we get some(ph), they say, Oh, that poor, guy. He has three kids. He is not going to do it again. Leave him alone. So these things have to stop.

WESTERVELT: But few think it will stop, as long as Greeks continue to have faith in the state to use their taxes wisely.

Athens University economist George Bitros says an ineffectual public sector consistently fails to deliver, from garbage collection and transport to basic bureaucracy.

Professor GEORGE BITROS (Athens University): You pay taxes and you don't get anything. If the Greek state fails, Greeks take the law in their hands. If they don't correct the delivery of public services, every one of us will have an incentive to tax evade.

(Soundbite of song, "Please No Squeeze Da Banana")

Mr. Louis prima (Singer): (Singing) Riley the cop would always stop on the corner at Tony's fruit stand...

WESTERVELT: A Louis Prima song seeps out of the speakers at Nikos Ntantalis' largely empty bar and cafe in the Psiri neighborhood of Athens. Since the 2004 Olympics, his business is down dramatically. Ntantalis says he can no longer afford to pay his federal or local taxes. He may have to file for bankruptcy. He says he owes the equivalent of about $50,000.

Mr. NIKOS NTANTALIS (Restaurant Owner): Everyone doesn't pay taxes. I have to pay the last two years. I haven't paid them yet and I'm not sure I'm going to make it. I have to close this time(ph).

WESTERVELT: Ntantalis complains that affluent, politically well-connected Greeks use loopholes, off-shore accounts and old-fashioned bribery to get off paying taxes, while small businessmen like him are left to shoulder the burden or sink.

In any case, Ntantalis says, he doesnt worry about getting caught.

Mr. NTANTALIS: So what? They can do me nothing. They want to kill me, what? By the time that I have money I will pay them. But I dont have this money.

WESTERVELT: Ntantalis has little reason to fear the tax collector. Few in Greece are ever held accountable. In 2007, the latest year for which data is available, only 10 people in the nation of more than 11 million were prosecuted for tax evasion or tax-related crimes.

Eric Westervelt, NPR News, Athens.

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