Greece proposes tourists as tax inspectors

6/5/2015

Peter Spiegel

Greece has proposed recruiting students, housekeepers, and even tourists to serve as undercover tax inspectors, one of a batch of economic reforms intended to unlock €7.2bn in rescue aid.

In a letter to eurozone authorities, the cash-strapped Greek government suggested that Athens could fight widespread evasion of value added tax by wiring “non-professional inspectors” with audio and video equipment to track down lawbreakers.

In addition to students and housekeepers, Yanis Varoufakis, the Greek finance minister, suggested that “even tourists in popular areas ripe with tax
evasion” could be part of the scheme. They could be paid an hourly rate “on a strictly short-term, casual basis” for no more than two months.

“The very ‘news’ that thousands of casual ‘onlookers’ are everywhere, bearing audio and video recording equipment on behalf of the tax authorities, has the capacity to shift attitudes very quickly,” wrote Mr Varoufakis in the 11-page letter, sent on Thursday to Jeroen Dijsselbloem, the eurozone’s chief negotiator, and obtained by the Financial Times.

The letter was sent ahead of Monday’s meeting of eurozone finance ministers and includes more traditional economic reforms, such as an independent “fiscal council” to monitor the government’s spending and plans for collecting unpaid taxes.

But the reaction from eurozone officials to the undercover tourist plan — one said staff laughed out loud when they read the proposal — is the latest
evidence of the growing gap between the Greek government and its international bailout lenders, at a time when Athens could be less than two weeks away from running out of cash completely.

“It’s quite hilarious, if it were not so tragic, that this is what a government in an industrialised country comes up with,” said one eurozone official involved in the talks.

Eurozone officials were forced to call off a visit by bailout inspectors to Athens planned for next week after Greek authorities objected that such a trip would appear similar to previous audits by the “troika” — the widely hated trio of creditor institutions the new government has vowed to do away with.

Mr Dijsselbleom has suggested that a small part of the €7.2bn in remaining bailout cash could be distributed to Athens quickly if the government immediately adopts reforms that creditors have been calling for. Some Greek officials had hoped the letter – which Mr Varoufakis characterised as “the first of a batch of reforms” — could be the starting point for such talks.

But eurozone officials said such discussions were premature since the troika — European Commission, European Central Bank and International Monetary Fund – have yet to pore over Greece’s books in order to find out how deep the country’s fiscal hole has become since the financial chaos unleashed by three months of political turmoil.

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“The eurogroup is not in a position to have a discussion of such measures if they have not been discussed by the three institutions,” said a senior EU official directly involved in talks with Athens. “PhDs abound [among finance ministers] but they don’t have the time to go through the laborious evaluation process — nor is it their job. That’s why you have the three institutions.”

Some eurozone officials believe Greece may run out of cash in less than two weeks. One official said there was already evidence that the central government was accessing reserve funds held by independent agencies in order to pay its bills.

“The situation is breaking down again and the possibility of a cash crunch is real,” said Mujtaba Rahman, head of European analysis at the Eurasia Group risk consultancy. “The Greeks’ proposed reforms aren’t going to be taken seriously by the eurogroup.”

Alexis Tsipras, the Greek prime minister, warned that without a quick influx of cash, “it will be back to the thriller we saw before February 20,” a reference to high-stakes brinkmanship before a deal to extend Greece’s bailout was agreed last month.

In an interview with the German magazine Der Spiegel, Mr Tsipras said it was up to the ECB to provide the emergency funding by lifting a ceiling on the amount of short-term debt Athens can issue. “The ECB has still got a rope round our neck,” he said.

But on Thursday, Mario Draghi, the ECB chief, said the central bank’s rules prevented it from lifting the limit.

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