But some things are harder to change. Asked if the state had the means, let alone the will, to properly collect taxes, Froso Stavraki, the head of the collectors’ union, took a long drag from a cigarette. “Huge efforts have been made,” she said in an interview in a cafe here last week. “But no, I don’t think people are afraid of us.”
A year ago, Prime Minister George Papandreou hammered out a $155 billion loan agreement with the European Union, European Central Bank and the International Monetary Fund. In return, Athens pledged a range of structural reforms: cracking down on tax evasion, raising the retirement age to 63 and a half from 61 and a half, limiting early retirement and opening the so-called closed professions whose guilds grant limited access to newcomers.
Now, as he comes back to Greece’s foreign creditors asking for the next $16.8 billion installment of aid — predicated on persuading Greeks to accept more tax hikes, wage cuts and the privatization of more than $71 billion in state assets before 2015 — doubts have emerged about the government’s ability to implement and enforce the measures it has already passed.
“The main problem is that he’s only been able to deliver on the parts of the austerity package that are easily enforceable and transparent and irrevocable,” such as cuts to public sector salaries and pensions, said Spyros Economides, a political scientist who co-directs the Hellenic Observatory at the London School of Economics. “Unfortunately, the rest of it is a complete mess.”
“It’s very easy to legislate,” Mr. Economides added. “The problem is to enforce legislation. There’s no enforcement mechanism. It’s all done for the eyes of the public.”
On Sunday, finance ministers from the euro zone will meet in Luxembourg and are expected to approve the next dispersal of aid. But if Mr. Papandreou fails to push through the new austerity measures that Parliament is expected to begin debating next week — with a confidence vote scheduled for Tuesday following a cabinet reshuffle last week — it could jeopardize the second rescue package that Greece needs in order to carry it through next year. A default would send the euro zone and world markets into a tailspin.
In March, Greece fired its top tax official on the grounds that he had not increased tax revenues enough. In 2010, Greece brought in 52.5 billion euros in tax revenue, up only marginally from 50 billion euros in 2009.
The country failed to collect on another 40 billion euros in back taxes owed in 2010, Ms. Stavraki said. “The problem is that most usually pay 20 percent of what they owe, and then they disappear,” she said.
To try to break what Ms. Stavraki described as a “personal, human” rapport that many Greeks have with their tax collectors, the state is reducing the number of collection offices to 72 from more than 200, and introducing a centralized electronic database system. But it has also cut the salaries of tax collectors, a move some say could encourage corruption. “Morale is low,” Ms. Stavraki said.
Adding to the difficulties, as the panic and uncertainty spreads, Greeks continue to take their money out of local banks. According to data from the European Central Bank, Greek banks lost 4 billion euros in deposits in May, following 2.4 billion in losses in April — part of a bank run that has seen an estimated 60 billion euros, a quarter of Greece’s gross domestic product, leave the country since the crisis began.
In February, the government passed a much-publicized law that removed the barriers to some of the so-called “closed professions, which range from truck drivers to pharmacists to engineers.
Powerful guilds essentially control who can get a license to practice in those professions, a system critics say rewards connections over merit.
Niki Kitsantonis contributed reporting from Athens, and Landon Thomas Jr. from London.
Article source: http://feeds.nytimes.com/click.phdo?i=9eb679fc3545d2c7eec3cddf72156d72
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