To show it means business, the Greek government has come out and named its worst tax dodgers, including 57 Athens doctors. Tax evasion is said to be costing Greece $30 billion a year.
Why is this important? If you believe Richard Murphy at Forbes, it would solve Greece's problem. According to Murphy, the shadow economy represents a massive 30% of Greece's gross domestic product. That's the biggest of any country in the OECD. Tax evasion in Greece is a national past time. Greece's deficit is now running at 13% of GDP and, Martin says, if 30% of black money was collected, it would reduce the deficit to about 4%.
That's the theory. The problem is it's not that simple. No regime in the world has ever managed to force every tax avoider to pay up.
Dean Baker, co-Director of the Center for Economic and Policy Research has a better solution.
He says a more sensible approach would be a tax amnesty where you set a period of say six months where you give tax cheats the opportunity to pay their back taxes from the prior three years with little or no penalty. At the end of this period, the government can move in to track down tax cheats and impose larger fines and criminal penalties on those who did not take advantage of the amnesty period.
If only 20% of the unpaid taxes was collected in this way, it would make a difference.
But then, the Greek government, desperate to show the world it means business, has decided it's easier to name and shame tax cheats. It's all about public relations and appearance. Chances are they won't get as much money.
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