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Germans Volunteer for Greek Tax Mission

Chris Bryant and Kerin Hope, Financial Times
Monday, 27 Feb 2012 | 2:47 AM ET

German tax collection experts have volunteered to go to Greece to help combat widespread evasion, in a move that risks reigniting tensions between Berlin and Athens.

Angelo Cavalli | Photodisc | Getty Images

Germany’s federal states have recruited about 160 experts to serve under a European Union and International Monetary Fund initiative to improve tax administrationin Greece.

A Greek government official reacted positively to the plan: “Such assistance with upgrading the quality and efficiency of the Greek public administration is very welcome.”

But the arrival of the German officials in Athens could reawaken anti-German sentiment that was triggered by a plan last month to appoint a “budget commissioner” to oversee Greece’s finances. A front-page headline in ProtoThema, an Athens tabloid, on Sunday described the volunteers as “an assault force of German tax collectors”.

A senior tax official said: “We don’t need outside help, we need better computer systems and more co-operation with other government departments.”

The volunteers could be deployed to conduct workshops or for “short- or long-term projects”, the German finance ministry said. They are all English-speaking and about a dozen speak Greek.

International lenders are ratcheting up pressure on Athens to curb tax evasion, estimated at 5 billion-6 billion euros ($6.7 billion-$8.07 billion) annually and address a backlog of unpaid taxes, exceeding 60 billion euros, according to European Commission and IMF estimates.

Greece’s parliament has to approve by Wednesday several ”prior actions” relating to an overhaul of the tax administration, including 300 audits of large taxpayers, before funds from a new bail-out package can be disbursed.

A crackdown on tax evasion has so far failed to make headway. While several hundred Greek businesspeople owing more than 100,000 euros in unpaid taxes have been arrested over the past three months, only a handful have paid up.

“The practice is to hand over a few thousand euros as a downpayment to secure release. Assets are not seized and it may be years before a case comes to trial,” a Greek tax lawyer said.

Direct taxes account for less than half of total government revenues, with value added and excise taxes making the biggest contribution, according to the finance ministry.

“Greece faces the kind of problems today that the former East Germany faced in 1990,” Norbert Walter-Borjans, finance minister in the state of North Rhine-Westphalia, home to many of the volunteers, told Wirtschaftswoche, a German magazine that first reported the plan.

After the fall of the Berlin Wall, West Germany sent thousands of officials to help rebuild administrative structures in the former communist east but the policy led to resentment. “The huge reservations that many East Germans had towards their West German cousins is nothing compared to the reservations that Greeks will have towards the Germans,” Mr. Walter-Borjans warned.

A poll conducted by the Emnid Institute for Bild am Sonntag newspaper found that 62 percent of Germans oppose the new 130 billion euros Greek rescue package. However, Germany’s parliament is expected on Monday to vote in favor of financial assistance.

Nonetheless, a member of Angela Merkel’s government has said for the first time that Greece should consider voluntarily leaving the euro zone in order to restore competitiveness. Hans-Peter Friedrich, interior minister and a member of the CSU, the Bavarian sister party of the chancellor’s Christian Democrats, made the comments in an interview with Der Spiegel. Ms Merkel has repeatedly said Greece should remain in the euro zone.

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