Greek government-debt crisis countermeasures

The Greek government-debt crisis is one of a number of current European sovereign-debt crises. In late 2009, fears of a sovereign debt crisis developed among investors concerning Greece's ability to meet its debt obligations because of strong increase in government debt levels. This led to a crisis of confidence, indicated by a widening of bond yield spreads and the cost of risk insurance on credit default swaps compared to the other countries in the Eurozone, most importantly Germany.

The OECD estimated in August 2009, the size of the Greek black market to be around €65bn (equal to 25% of GDP), resulting each year in €20bn of unpaid taxes. This is a European record in relative terms, and in comparison almost twice as big as the German black market (estimated to 15% of GDP). Another study found that seven out of 10 self-employed Greeks significantly under-report their earnings, with only 200 Greeks declaring incomes of over €500,000. Undeclared income from self-employed Greeks (particularly doctors and lawyers) amounted to €28 billion in 2009, more than 10 percent of the country's gross domestic product that year. The state lost €11.2 billion in tax revenues as a result. Above all, ship owners benefit from dozens of tax exemptions. A rapid increase in government revenues through implementing a more effective tax collecting system has been recommended but several successive Greek governments had failed to improve the situation. Implementing proper reforms is estimated to be a slow process, requiring at least two legislative periods before they start to work.

In 2010 the government implemented a tax reform. In November 2011, the new Greek finance minister Evangelos Venizelos called upon all persons who owe the state more than €150,000 to pay their outstanding taxes by 24 November or find their names on a black list published on the Internet. The government later revealed the list, which also includes a number of prominent Greeks, including pop stars and sportsmen. In January 2012, Athens was considering the establishment of a 100-strong unit to go after wealthy tax evaders. The year 2012 also saw the introduction of a duty of non-cash payments for amounts over 1,500 Euros. Meanwhile, the Greek police have established a special unit, which deals exclusively with tax offenses. Germany has offered experts from its financial management and tax investigation office to help build a more efficient tax administration. However, months later it was not clear whether Greek officials would accept the offer.

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Wikipedia