“I want to get this year’s declaration just right so I’ll be prepared when the new income tax system starts being applied next year,” said Anna, a middle-aged woman holding a fat envelope from the finance ministry. She declined to give her full name.
The rush of activity in a middle-income district such as Kypseli highlights fears that decades of official tolerance of tax evasion may be coming to an end.
The tax legislation approved on Thursday marks the first important structural reform under the government’s drive to cut the budget deficit this year from more than 13 per cent to 8.7 per cent of gross domestic product.
The law aims at boosting annual revenues from direct taxation by at least 2.5 percentage points of GDP by increasing taxes for higher-income earners and cracking down on evasion.
“Tax evasion is top of the list of reforms,” George Papandreou, prime minister, said in a speech to the Brookings Institution in Washington in March. “We will be prosecuting offenders, no matter how rich or powerful, to show that we mean business.”
Fewer than 5,000 Greeks declare annual incomes of more than €100,000 ($135,000, £88,000) – although more than 60,000 Greek households have investments in cash and securities exceeding €1m, according to estimates by a private Greek bank.
SDOE, a financial police unit disbanded by the previous government, is back at work, tracing the beneficial owners of offshore companies that keep large motor-yachts in marinas around Athens.
High-income professionals – among them a group of medical practitioners with offices in the capital’s upmarket districts who reportedly declare less income than their receptionists – are also under investigation, according to officials.
But Drassi, an Athens think-tank, criticised the legislation for being difficult to implement, saying: “It’s deliberately vague and full of special directives and conditions that are open to different interpretations by tax officials on the ground.”
Corruption is widespread among tax officials, according to Greek companies.
“It’s much easier to agree on an under-the-table payment than challenge your tax assessment through the legal system,” said Markos, an Athens-based developer who declined to give his full name.
Dimitris Georgacopoulos, the senior finance ministry official in charge of tax collection, admitted last week that revenue-raising was in dire need of improvement.
First-quarter tax receipts were down 24.5 per cent on an annual basis, according to figures published last week.
Mr Georgacopoulos lambasted directors of Greece’s largest regional tax offices for failing to meet revenue targets by more than 20 per cent. He said more than 20 out of 70 tax offices had failed to provide data on tax collection for the first quarter. “We’re trying to restore order to the public finances. . . This is an unacceptable situation,” he said.
The question is whether it can undertake the rescue before it loses the public’s trust. An opinion poll on Friday showed two thirds of Greeks are dissatisfied with Mr Papandreou’s socialist government’s performance but his own approval rating improved slightly to 68 per cent.
About 66 per cent of those asked in the Public Issue poll believed social unrest would mount in coming months.
“I don’t believe things will get better. I am not prepared to make more sacrifices because I don’t think these measures or any future cuts will get us out of the crisis,” office clerk Anastasia Griva told Reuters on Friday. “This is not our fault. The rich, the politicians, the tax evaders must pay.”