Wired-up tax snoopers could be unleashed in Greece

The Guardian

By Ian Traynor in Brussels and Helena Smith in Athens

Finance minister Yanis Varoufakis comes up with novel methods to reform Greek economy before meeting with eurozone ministers

The Greek government has told its eurozone creditors it has a novel way of tackling the country’s chronic tax evasion culture – wiring students, tourists, and housewives for sound and video to spy on tax dodgers while posing as shoppers and customers.

Yanis Varoufakis, the flamboyant new Greek finance minister, wrote to In a letter to Jeroen Dijsselbloem, the Dutch finance minister and head of the eurogroup, and laid out seven proposed reforms of the Greek economy before Monday’s meeting of eurozone finance ministers in Brussels.

The 11-page letter comes after last week’s breakthrough agreement of a four-month extension of Greece’s bailout despite the new leftwing Syriza government’s pledge to scrap the eurozone rescue and its tough austerity terms.

Varoufakis conceded for the first time that Greece might require a third eurozone bailout if and when the present programme concluded, as scheduled, by the end of June. He accepted further negotiations would be needed between Greek finance experts and the troika of technocrats from the International Monetary Fund, the European commission and the European Central Bank which has policed the Greek bailout and dictated Athens fiscal policy for the past five years.

But it was Varoufakis’s plans for a new government-sponsored amateur snoopers’ charter that attracted most attention.

In the letter, leaked to the Financial Times, Varoufakis said the backlog of tax arrears in Greece stood at €76bn (£55bn), but that only €8bn of this was probably recoverable.

He said the prospects of successfully countering tax dodging were dismal because of the demoralised and understaffed state of the tax inspection service. Instead, he proposed recruiting large numbers of “non-professional inspectors” on short-term casual contracts of no longer than two months who would be paid by the hour. They would be “wired for sound and video”, trained to pose as “customers” and “will be hard to detect by offending tax dodgers.”

The data the amateur snoopers gathered would be used by the authorities “immediately to issue penalties and sanctions.”

Varoufakis said the launch of the amateur snoopers would act as a deterrent, “engendering a new tax compliance culture” in Greece.

He added that Athens would need to ask eurozone partners for help with the equipment and the training. Germany has previously offered to send 500 tax inspectors to Athens.

To try to alleviate widespread poverty from five years of savage austerity, Varoufakis said the government wanted to introduce a smart card scheme which bearers would use for health insurance but which would also include food stamps worth €100 a month for up to 300,000 families.

About 150,000 poor families with no power supplies would be reconnected free of charge and receive free electricity. Rent allowances worth €150 a month would be made available to 30,000 families.

The costs of the poverty reduction measures would amount to €200m but would be made fiscally neutral through cuts in civil service spending and a new system of public tenders.

In Athens, news of the undercover tax agents was quick to spark ridicule and widespread disbelief. “I think heads will roll after this,” said one well-placed insider, requesting anonymity. “These proposals are simply outlandish.”

Sequestering the support of tourists rather defied the definition of the word tourist, another one said. “They’re meant to be on holiday. That is the definition of a tourist,” he said.

Germans lead the league table of tourist arrivals in Greece; more than 2.5m visited last year and as many are expected to descend on the country this summer. Speaking to the Guardian, the head of the Greek Tourist Confederation, SETE, said the best way to beat tax evasion would be through the exclusive use of credit cards and tax rebates.

“You cannot ask tourists or Greeks to spy,” said SETE’s chief Andreas Andreadis. “The most practical way of tackling tax evasion ... would be simply to forbid cash transactions above €100. Paying by credit card would automatically force the transaction to be shown on the cash register. They will say people don’t have credit cards but that is rubbish. Another practical way would be to give tax benefits to those who collect receipts, as German MPs [have] proposed.”

But not everyone was against the plan. Herakles Galanakopoulos, an accountant who specialises in tax, said that the government had to have new ideas: “Why not resort to such measures,” he said. “The government has to find some way of dealing with this problem – the state urgently needs revenues.”

In the letter, Varoufakis also said talks with the troika, although he refuses to use that word, should be resumed “immediately”.

He also demanded “higher-level discussions regarding a possible follow-up arrangement” – a third bailout. Varoufakis suggested it be called “a contract for recovery and growth”.