One of the biggest issues plaguing the modern state of Greece has been corruption. This corruption has taken many forms, the most prevalent being tax evasion and money laundering. As a result, the Greek economy has suffered tremendous setbacks. While efforts are being made to stem this corruption, it remains an uphill battle.
Corruption and the Shadow Economy Remain as Serious Issues
A recent study conducted by Transparency International noted that the ongoing Greek financial crisis has its roots precisely in these forms of corruption. The amount of uncollected funds reached a total of 30 billion Euros in 2012.
In 2016, the amount of uncollected taxes per annum was estimated to be between 11 billion and 16 billion Euros. This represents money that is being drained away from the country’s infrastructure, social services, and other vital programs that are necessary to keep the nation functioning in good order.
The global financial crisis of 2007-2008 saw Greece affected far more adversely than other European states. The situation has not improved appreciably in the years since. In the year 2012, the illegal or so-called “shadow” economy, from which no taxes were ever collected, represented 24.3 percent — nearly a quarter — of Greece’s total GNP.
Money Laundering Remains a Vital Drain of Resources
One of the biggest sources of corruption in the Greek economy is money laundering. A study by the Tax Justice Network concluded that there is currently over 20 billion Euros being held in secret Swiss bank accounts by Greek tax evaders that can be accounted to this particular form of corruption.
The total amount of unreported tax income currently being stored in Swiss bank accounts is estimated at 80 billion. This represents income not only from money laundering but also through unreported tax income. Also added to the equation is money that has simply been siphoned off through corrupt business practices.
A statement by Evangelos Venizelos, the former Finance Minister, alleged that an estimated 15,000 individuals and companies owe nearly 37 million Euros in uncollected tax revenue. Meanwhile, the number of off-shore companies being used as illicit tax shelters was estimated at over 10,000.
“Little Envelopes” Are a Persistent Source of Corruption
One of the most prevalent sources of corruption has been the practice of “fakelaki.” This term, meaning “little envelope”, is used to refer to bribery of public servants and corporations by Greek citizens as a means of expediting service. The term was popularized during the recent National Healthcare Service corruption scandal.
The practice basically consists of stuffing money in these envelopes, which is then passed to the recipient. The goal is to secure the approval of documents, permits for various activities, and even appointments with highly placed local and national officials.
Efforts to Reduce Corruption Include the Use of Debit Cards
One anti-corruption measure that has seen some success has been the introduction of electronic payments, such as debit and credit cards. The point has been to encourage the use of these electronic devices in order to stem the practice of paying for goods and services using cash.
The idea is a simple but reasonably effective one. The more payments are made with the use of these credit card and debit cards, the easier it will be to document these transactions as well as to record their exact amount. This will tend to cut down on the number of completely undocumented cash payments that can be easily siphoned off.
Electronic Payments Are Being Used to Reduce Invoice Fraud
Invoice fraud has long been one of the most effective practices that business owners can use to obscure the collection of funds that are not reported as taxes to the government. A new measure has recently been introduced that is designed to short circuit this longstanding practice.
Starting in January 2017, Greek taxpayers were only allowed to claim tax allowances or deductions if and when these payments were made using electronic means. This measure guarantees that the payments can be fully documented and audited by the Greek government.
This new law is expected to reduce the occurrences of businesses taking cash-only payments without issuing a tell tale invoice. By doing so, the government now has a better chance of getting a reasonable share of income and VAT taxes.
The Lagarde List Remains a Source of Controversy
One of the most publicized efforts on the part of the Greek government to fight corruption was the assembling of the so-called Lagarde List. This was a list of nearly 2,000 persons who are alleged to hold secret account with the Swiss bank HSBC.
The list was received by the Greek government from Christine Lagarde, the former Finance Minister of France, in 2010 and was a source of immediate controversy. Since its reception, the Greek government has alternately threatened to act on this info or claimed that it was “stolen” and therefore impossible to use in a court of law.
Greek authorities arrested Kostas Vaxevanis, the editor of the magazine “Hot Doc” that published the Lagarde list. However, he was ultimately acquitted and released. Since then, the government has done little to act on the info it received via this list.
While some concrete measures are now in place to corruption and money laundering, it must be said that the government still has a long way to go to resolve them.