IMF to Greece: Here's how you combat tax evasion

The IMF special report on the Greek tax system reveals all the pathologies underlying the Greek tax-collection mechanism, but Fund analysts do not stop here. Apart from the fact of pointing out how absurd it is to pay taxes today in Greece, they are proposing reforms to the tax system in order for the state coffers to stop bleeding from tax evasion.

IMF experts observe that the simplification of the tax system will enhance public confidence in the state machine, resulting in increased revenue from taxation; an increase, which can be enhanced by effective penalties for tax evaders, strengthening the monitoring mechanism and curbing any type of tax exemptions. In the long term, IMF estimates that this practice will reduce the high tax rates also, to the benefit of social strata that have to bear the larger parts of tax burdens.

IMF estimates that the changes will have to start from the head of the tax collection mechanism, with a strong leadership, capable of eliminating previous establishments, design a flexible tax mechanism and provide the appropriate incentives to tax officers.

Meanwhile, it suggests the strengthening of Large Wealth Taxation in order to curb the phenomenon of evasion of the rich, which has also been occasionally criticized by senior European officials, as Angela Merkel, Wolfgang Schäuble, Jean-Claude Juncker and Christine Lagarde.

IMF also raises the corruption issue of perjurer tax officers, stressing that if fought, it will bring significantly higher revenues, which will be directed to the state coffers.

Lastly, the authors recommend a broader reform of the state machine to facilitate tax collection and the work of tax officers. They also observe that reforms in the management of public finances will enhance the work of tax collectors, while they pose the combat of corruption phenomena within the state machine as a key priority in order to close any possible gaps that could cause revenue leakage.