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‘The international story is, we’re a basket case’

‘The international story is, we’re a basket case’

The Greeks are in the streets, protesting against tough austerity measures and labor market reforms. But Greek finance minister George Papaconstantinou says the measures are vital.

July 8, 2010 7:16 by

Are there going to be new taxes?

There’s a rebalancing of existing property taxes toward the high end and we’re increasing rates on off-shore real estate up to a punitive 15 percent, to force those who hide behind it to convert it into normal property. All the big villas in Mykonos (an island in the Aegean Sea notorious for its hedonistic lifestyle), the expensive houses not owned by individuals but by offshore companies, they will be targeted. Then I can use the list of property we will come up with to cross-check with income, because 75 percent of all professionals declare lower incomes than they actually earn.

I’m introducing presumptive taxation, which allows us to add up incomes and stops others from declaring income of 12,000 euros a year (the tax threshold in Greece). Tax evasion is so rampant in this country. Among those who are self-employed, you can only really police them by looking at their lifestyle and assets, and inferring through cross-checks how much they should be earning. We’re currently doing a cross-check between what they’ve declared over past 10 years and the assets they own – so if you declare 12,000 euros a year and own a million-euro villa, alarm bells will ring.

Is targeting high-earning private doctors part of the plan?

Yes. What was missing until now was political will. It only took one simple request to get the full list of doctors and their tax receipts within 48 hours.
There are 250 doctors working in Kolonaki (a wealthy downtown area). One-third declare incomes below 12,000 euros. We went through a process of going to doctors’ offices to establish that they were cutting receipts and saw that they had lots of appointments, but no transactions on their books. And now the government is prosecuting them.

Are you offering tax amnesties?
We have one type of amnesty: Within the next six months if you bring money that’s abroad, you pay 5 percent tax on it and we call it quits.

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