IMF Warns Greece On Tax Reform
09 May 2013
Posted by: Author: Lorys Charalambous
Source: Lorys Charalambous (Tax-News.com, Cyprus)
An IMF mission to Greece has said that there has been "very little progress" in tackling tax evasion, and that tax administration reform has so far been "disappointing."
According to a statement issued by the body: "The rich and self-employed are simply not paying their fair share, which has forced an excessive reliance on across-the-board expenditure cuts and higher taxes on those earning a salary or a pension."
The European Union's Task Force for Greece has provided technical assistance with various areas of tax administration reform, and is currently focusing on the country's Tax Procedures Code. However, the IMF judges that delivery on tax administration reform requires "a deeper political commitment," and that political interference remains "pervasive." The IMF describes moves to give the administration new powers to manage its own personnel and budget as "a key step" in establishing its independence.
The statement also notes that prices so far have not fallen in line with lower wages, and that a "taboo against dismissals" remains in the public sector. More positively, however, it describes progress on fiscal adjustment as "exceptional." It also states that the country's competitiveness gap has been narrowed significantly, and that the financial sector remains stable.
The IMF also warns Greece not to increase growth artificially through tax-free zones or subsidies. It argues that the country "cannot afford" to make its tax system more complicated and that such moves would undermine efforts to improve tax collection.