Tax shortfalls in Greece

Expressed in terms of GDP, tax revenues have been steadily decreasing in Greece since 2000. This is happening in a context of demand-driven growth, positive cyclical conditions and revenue-enhancing discretionary policies. It would therefore appear that factors other than growth strength and composition, such as those associated with inefficiencies in tax administration, are hampering tax collection. Although recent efforts to improve tax administration appear to have lessened the impact of these inefficiencies in recent years, they are still significant. This has implications when assessing the medium-term revenue and overall budgetary targets, as presented in the latest update of the stability programme. The main conclusion of this Country Focus is that medium-term budgetary targets would need to be underpinned with further revenue-enhancing measures, including effective reforms of the tax administration and enforcement, as recommended by the ECOFIN Council of 4 March 2008