For five years, Greece has lived in a sort of debtor’s prison, or a severe austerity imposed by its European partners to atone for financial sins that threatened the Continent’s unifying project. The greatest sin was a culture of tax evasion and fraud. On Monday, however, a new government led by youthful leftists made a credible pledge to European creditors that Greece will “turn the fight against corruption into a national priority.”
This promise, which will require a huge shift in civic virtues among Greeks, remains crucial to the country winning an extension of a $270 billion bailout program. Two previous governments made limited progress in tax compliance. But their efforts only helped expose the depth of crony politics and tax dodging that first led to giant (and hidden) deficits and a nearly unrepayable national debt.
“The great struggle is the struggle against tax evasion, which is the real reason our country reached the brink,” Prime Minister Alexis Tsipras told Parliament on Feb 8.
Tax collection, as book author and journalist Yannis Palaiologos explains, is something the “modern Greek state has never quite mastered in almost two centuries of existence.” Yet Greece now has its first anticorruption minister and the credibility that a new government can persuade Greeks to see a common interest in paying taxes. Too many small businesses and professionals still live in a cash-only economy or fail to keep honest records.
Greeks must also see that paying taxes will lead to less austerity and better government services. And Mr. Tsipras must crack down on the smuggling of fuel and cigarettes, raise the number of tax collectors, and end the practice of special tax favors before elections. One analysis of tax evasion over decades found it goes up substantially around election time.
Perhaps unplanned, Tsipras’s promise to the European Commission came on “Clean Monday.” That is the first day of the Orthodox Church’s period of Lent leading up to Easter and which requires the leaving of old sins behind. It is a day when this passage from Isaiah is commonly read: “Come then, and let us reason together, saith the Lord: Though your sins be as scarlet, I will make them white as snow.”
If taken to heart, those words might convince more Greeks that, despite a scarlet legacy of tax corruption, they can quickly become model citizens.