Nationwide spot inspections find 1 in 2 Greek businesses are cheating the taxman in some way

Nationwide spot checks by Greek tax inspectors have found that almost every other business is cheating the taxman in some way, as the debt-hobbled country's authorities struggle to improve revenue collection amid a crippling recession.

Despite repeated campaigns by successive governments to clamp down on tax fraud, it remains a major problem in Greece, which for the past three years has relied on vast international rescue loans to stave off bankruptcy.

Finance Ministry data released Friday showed that 731 of 1,465 companies — mostly restaurants, bars, coffee shops and clubs — checked from July 25 to Aug. 5 had violated tax laws. The highest rate of non-compliance, some 85 percent of those checked, was on the islands of Evia and Skyros.

The top tourist destinations of Mykonos, Santorini and Crete had rates of over 56 percent of the businesses investigated.

Authorities have recently ordered 12 businesses to close for a month for outstanding tax violations or resisting inspectors, and are planning to shut down another 14 for similar reasons — including a restaurant on Crete where customers allegedly chased away a team of inspectors this week.

Finance Minister Yannis Stournaras said the government was forced to pass special legislation to enable tax checks on weekends and during the holiday month of August.

"We are engaged in an unprecedented campaign, closing down businesses and legislating," he said in an interview with Mega TV, a private channel. "You can't win the fight against tax evasion without carrying out checks."

Stournaras said that, in some areas, entrepreneurs had not been issuing any receipts at all, concealing revenues and pocketing the sales tax levied on transactions.

"If this is Greek society's system of values then I am truly sorry but penalties must be imposed," he said. "We must all demand receipts."

Taxpayers are encouraged to seek receipts for goods and services purchased — effectively doing the taxman's job — on pain of paying additional income tax.

Over the past three years, Greeks have been clobbered with successive tax hikes under a deeply resented austerity program demanded by the International Monetary Fund and European countries in exchange for the country's rescue loans.

Combined with pension and salary cuts, the measures worsened an economic contraction often compared with the Great Depression of the 1930s, with unemployment hitting a record 27.6 percent in May. Among youths, a staggering 65 percent is without a job, although the conservative-led government has suggested that some businesses have been firing staff and rehiring them under the table, to avoid social security contributions.

So far, the public sector, which is broadly seen as largely inefficient and overstaffed, has avoided job losses — civil servants have for about a century enjoyed guaranteed jobs for life.

But the government has promised creditors it will lay off 15,000 civil servants by the end of next year, and suspend another 25,000 for up to eight months before subjecting them to involuntary transfers.

Stournaras said Friday that the layoffs are intended to improve the quality of the civil service rather than to save money.

"Those who will leave will be employees with disciplinary offences, who cannot carry out their duties, and will all be replaced by young people," he said.

A report by the public administration inspectorate this week found that nearly 70 percent of workers at the state National Tourism Organization failed to work the minimum hours required in November. At a state social security fund the figure rose to 75 percent, some of whom allegedly still received overtime pay.