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Greece Financial Crisis  Striking Greek municipal employees chant slogans during a protest outside at the northern port city of Thessaloniki, Greece as a banner reads in Greek
Striking Greek municipal employees chant slogans during a protest outside at the northern port city of Thessaloniki, Greece as a banner reads in Greek "bailout agreement" Friday. The workers demonstrated against government plans to suspend 2,000 civil servants for potential dismissal because of state budget cuts.
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Published: Monday, 12/17/2012

European Union says Greece's tax collection still failing to meet targets

ASSOCIATED PRESS

BRUSSELS — Greek tax collection is still falling well short of key targets that need to be met to reduce the government's staggering debt pile, the European Union warned on Monday.

An EU task force helping Greece overcome the financial crisis that brought it to the brink of bankruptcy said Athens still has trouble dealing with old, outstanding tax claims. With 2 months to go in 2012, it was still about a billion euros behind the EU target of recovering €2 billion ($2.6 billion).

In a report it said Greece made only 88 audits of large taxpayers, well short of a 2012 target of 300, and 467 of “high-wealth individuals,” below a 1,300 target.

Overall, though, EU Vice President Olli Rehn said Greece was tackling problems “with determination and resolve.”

Greece's partners in the 17-country eurozone agreed only last week to hand over the next disbursement of the country's bailout loans, which will prevent it from going bankrupt and triggering more turmoil in financial markets.

The cash-strapped country will get a total of €49.1 billion ($64 billion) between now and March, with €34.3 billion due in the coming days.

In return for the money that will see Greece through the winter months, the country had to commit to further austerity measures, including more spending cuts and tax increases.

And it needs to better enforce rules it already has set to get the public finances back on track. The EU set up a task force of specialists to guide Greece through that process and it produces quarterly reports to chart progress.

Taxation is a particularly tough issue to deal with. “The Greek Tax administration is falling short of targets and is not well placed to meet end-2012 benchmarks,” the report said.

The group did insist in the report that the new government of Conservative Prime Minister Antonis Samaras was strongly committed to an overall reform of the tax system.

Last week, the Greek government proposed legislation for a simplified tax system by which people earning more than €42,000 ($55,000) per year will now be taxed at a new top rate of 42 percent.

Under the new guidelines, the 42 percent top tax rate and earnings threshold replaces the previous level of 45 percent for incomes above €100,000 ($130,770). There are currently eight tax bands ranging from 18 percent to 45 percent. These will be replaced by three tax rates: 22 percent, 32 percent and 42 percent.

For years, Greeks have been complaining about the uncertainty created by an ever-changing tax system, arguing it undermined compliance and revenue. Tax evasion and corruption has long been a major problem.



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