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17 Nov 2011 20:23
Greece stands to lose €52-billion in unpaid taxes and is set to raise a mere €1.3-billion out of a €5-billion target for privatisation proceeds this year, the EU said on Thursday.
The figures emerged from a report by European Commission experts seconded to Athens to help reform Greece’s economy and re-direct unclaimed EU grants to boost flagship development projects.
“Sixty billion euros of unpaid taxes—of which €30-billion in pending tax cases—are currently outstanding in Greece,” said the report by commission “task force” chief Horst Reinchenbach, citing very low collection prospects with a backlog of some 165 000 tax files to be processed.
An EU official said only half in the legal in-tray is even “theoretically collectable” and that only €8.0-billion were likely to be recovered “sooner or later.”
On Wednesday, the Greek finance ministry said tax receipts for the first 10 months of 2011 had dropped 4.1% on the corresponding period last year.
At just over €39-billion, that leaves an additional budget shortfall of €1-billion to be made up.
Seeking to improve those odds, the EU executive is helping Greece negotiate with Switzerland in a bid to claw back “vast amounts” of money believed to be hidden in Swiss banks by Greek nationals.
“Solutions are being explored to provide Greece with an adequate way to increase tax revenue, taking into account the vast amounts channelled to Switzerland by Greek nationals,” Reinchenbach’s first quarterly report said.
“We want Greece to get the best deal possible using EU and IMF experience and legal support,” said the EU the official who requested anonymity.
Facing a fourth year deep in recession, Athens wants to emulate direct deals done with Switzerland by Germany and Britain to recover proceeds from assets hidden in the country by their nationals seeking to avoid tax.
Secretive bank vaults
Swiss media have estimated that some €282-billion in Greek assets are hidden in secretive bank vaults.
But last year the Swiss National Bank said just €4.1-billion in Greek assets were held in 2010.
Reinchenbach admitted the task force, which took up its work on September 1, had delivered “few concrete steps” forward.
Making matters worse, a wider economic downturn is wreaking havoc with bailout partners’ demands that Greece produce €50-billion in privatisation receipts by the end of 2015 in exchange for new rescue funding.
The first €5-billion in sales was originally due this year and a total of €15-billion by the end of next year but a “new target” foresees only “revenues of €1.3-billion from privatisations and concessions” by December 31, the report said.
The team is expected to remain in Greece for up to three years as Athens reforms the economy in exchange for EU and IMF bailout loans.
The biggest problem right now is the banks who have been weakened by a deep recession—the economy is expected to shrink 5.5% this year—and a 50% write-down in the value of their Greek government bond holdings.
The European Commission wants to re-direct €2-billion of funds sitting in EU accounts but already earmarked for Greek infrastructure investment towards restoring the flow of credit for small and medium-sized businesses.
However a plan to build a new €8.7-billion motorway network—tipped in time to add up to two percentage points to the country’s growth—is snarled up in litigation involving many of Europe’s biggest civil engineering firms.
Contracts have been put on hold, putting tens of thousands of jobs into cold storage due to the credit squeeze and reduced traffic forecasts, the EU official said.
Plans for a €20-billion investment in solar energy generation have also fallen into abeyance.—Sapa-AFP
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