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Greece forces citizens to spend more online in tax evasion crackdown

Edmund Heaphy
·Finance and news reporter
Greek Prime Minister Kyriakos Mitsotakis arrives for the second day of the European Union leaders summit dominated by Brexit, in Brussels, Belgium October 18, 2019. REUTERS/Piroschka van de Wouw
Greek prime minister Kyriakos Mitsotakis in Brussels. Photo: Reuters/Piroschka van de Wouw

Greeks will be forced to spend around a third of their income using electronic means if they want to avoid substantial fines designed to stamp out rampant tax evasion.

The Greek government expects to raise around €500m (£422m) from the plan, said Alex Patelis, the Greek prime minister’s chief economic adviser, in an interview with the Daily Telegraph.

Greece is thought to have the world’s largest shadow economy, with many firms and citizens routinely underreporting income in an attempt to evade taxes.

If Greek citizens do not spend 30% of their income using debit cards, credit cards, bank transfers, or on online transactions, they will be hit with a 22% fine on the shortfall, according to the Telegraph.

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Last year, a documentary that labelled tax evasion a “national sport” in Greece attempted to explain the mentality of the country’s taxpayers.

The Institute for Applied Economic Research found that Greece’s shadow economy accounted for almost a quarter of the country’s overall economy.

Many workers still receive their wages in cash, and internet usage in the country is also low by international standards.

The move is part of a prime minister Kyriakos Mitsotakis’ plan to revamp the country’s tax system. Mitsotakis was elected in July, and in September announced that the rate of corporate tax would be cut from 28% to 24% next year.

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He also promised to cut the rate of tax on the lowest tax bracket, from 22% to 9%, and to give out an annual bonus to pensioners at the end of next year.

Saying that Greece was “no longer Europe’s black sheep”, Mitsotakis pledged to increase a “bold wave of reforms” in order to strengthen the country’s credibility.

Greece, which implemented harsh austerity policies during its decade-long debt crisis, is hoping that its lenders will ease fiscal targets from 2021.