Prodigal nation: Europe pats Greece on the back
Tourists visiting the Greek island of Santorini these days may ask why drones are flying overhead. The short answer: The government is trying to instill an ethos of integrity among Greeks. The drones check if tour boat operators provide receipts to visitors, a clever way of changing a deep-rooted culture of tax evasion.
Last week, the European Commission announced that it will end its special surveillance of Greece on Aug. 20 because the country has implemented so many reforms – like the tax-enforcing drones – over the past dozen years. In 2009, the government in Athens admitted it had lied about the size of its debt, setting off a financial crisis in the European Union and almost ending the bloc’s experiment with a single currency. After receiving very large bailouts – more than $300 billion in total – Greece has now “delivered on the bulk of the policy commitments,” stated the European Commission, the bloc’s executive arm.
It has also paid off its debt to the International Monetary Fund – two years early. In 2019, Greece created its first anti-corruption body, known as the Transparency Authority.
“Today’s Greece is a different Greece,” declared its prime minister, Kyriakos Mitsotakis, in July. “It is one of the countries with the most dynamic growth and the highest reduction of unemployment in Europe.”
One key to the reforms, besides fiscal austerity, were tactics to boost tax collection. A Greek habit of evading taxes was one reason the government long lied about the size of its deficit spending. In an unusual attempt to depoliticize taxes, a new collection agency was set up to run independently of the Finance Ministry. The government also provides incentives for people to move away from cash transactions toward the use of credit cards and online transactions.
A lowering of tax rates has encouraged compliance. And a public relations campaign called “Apodizi, please” recommends that tourists ask for receipts.
“As a result of Greece’s efforts,” the European Commission noted, “the resilience of the Greek economy has substantially improved and the risks of spillover effects on the euro area economy have diminished significantly.”
Greece still ranks high among EU nations in tax avoidance – better than Romania but not as good as Italy. Yet tax revenues are rising, and as Greece’s chief tax collector, George Pitsilis told the International Monetary Fund, it’s time for Greeks to develop a sense of personal responsibility. Greece’s European partners have now endorsed the country’s progress so far – by ending their watchdog role over Greek reforms.
