EVER SINCE the need for spending cuts started being discussed three years ago, public sector unions have been claiming that all state’s financial problems could be solved if there was a clampdown on tax evasion. It was a very clever move, as it deflected attention away from the principal cause for the widening budget deficit – the constantly increasing public sector pay roll which was growing at an annual rate of about five per cent.
Blaming greedy businessmen, who were tax evading, for the precarious state of public finances suited the unions that were determined to protect their members’ privileges as well as the communist government which did not want to touch public sector wages and seized the opportunity to engage in some class war. It was the greedy rich, constantly referred to by union bosses as the ‘haves’, who had caused our problems and should be burdened with the cost of the recession, not the hapless public employees.
This narrative was fully endorsed by the government and we read reports of unpaid taxes in the region of anything between 300 and 500 million euro. Nobody was certain about the real figure even though there was no doubt that tax collection should have been more efficient. The troika also believed there was a problem and under the terms of the MoU the country is obliged “to reform the revenue administration with the objective to reinforce the efficiency and effectiveness of revenue collection capacity and the fight against tax fraud and evasion.”
On Monday the director of the Inland Revenue Giorgos Poufos was complaining that his department did not have the resources to take on the tax cheats. The number of staff had been reduced by one third in the past few years through retirements and its IT systems were outdated. But who is to blame for the failure to tackle these weaknesses? It is not the tax cheats and wealthy individuals that are responsible for the department’s under-staffing.
The culprit is PASYDY that does not allow the transfer of civil servants from one ministry to another. Although, it had allegedly agreed to transfers in the service in one of its agreements with the Christofias government PASYDY is still blocking them, with the result that services like Inland Revenue are severely understaffed, while at the departments of other ministries are criminally over staffed. With the freeze on appointments, Inland Revenue will have enough staff to clamp down on tax evasion only when PASYDY lifts its restrictive practices.
As for the outdated IT systems, PASYDY again should shoulder most of the responsibility. Computerisation in the public sector has been moving at a snail’s pace because the union wants to keep its members in jobs. And who is to blame that from tenders’ invitation to delivery of an IT system it might take up to three years by which time both hardware and software is out of date.
How funny that those complaining about the failure to clamp down on tax evasion are the very same people who are preventing it.