Shadow Economy Costs Greece 3.5B Euros Tax Losses Annually

Photo: Eurokinissi/Sotiris Dimitropoulos

ATHENS –  An avalanche of new taxes imposed by the ruling Radical Left SYRIZA-led coalition has led to more people avoiding taxes and a growth in the underground, or so-called black or shadow economy, that is seeing Greece lose 3.5  billion euros ($4.18 billion) annually in taxes, creating a parallel world of business.

The rate of lost income reaches 21.5 percent, the highest in the world for a country where tax evasion is a national sport and continues almost unabated despite pledges from the government to crack down, a pledge made by each administration that fails.

It includes everything from not giving receipts to fuel and cigarette smuggling as there are not enough inspectors to check and the fines for those caught often amounts to a fraction of what they can make by continuing criminal activity.

On Mykonos, for example, private businesses have taken over public beaches with one unidentified owner crowing to newspaper Kathimerini that he pays fines of about 14,000 annually – less than he makes in a day.

Marking the Day of Greek Commerce on Sept. 22, the leadership of the Hellenic Confederation of Commerce and Entrepreneurship (ESEE) said “prospective” losses reach as high as 17-20 billion euros ($20.32-$23.9 billion,), including the 3.5 billion euros from lost Value Added Tax that isn’t collected.

The figures, according to the trade group, are cited in a recent study by the Organisation for European Economic Co-operation (OECD) and the European Union Intellectual Property Office, the business newspaper Naftemporiki reported.

Unpaid taxes in Greece have reached 95 billion euros ($113.53 billion) and growing as SYRIZA has been unable to make a dent in the problem while pounding workers, pensioners and the poor with more austerity measures.

Earlier this year the New York Times reported that, “Tens of thousands of Greeks have been registering companies in Bulgaria, Cyprus, Luxembourg and other low-tax countries to avoid paying the higher tax bills at home — which means less revenue for Greece’s coffers and creates unfair competition for tax-paying entrepreneurs who could potentially play a bigger role in the revival of Greece’s economy,” which is still lagging.