Tech whiz kid tackles 'astonishing' Greek tax evasion

He calls himself an "IT monkey" on Twitter and sends 1 a.m. tweets to Greek taxpayers. What other high-tech ways will Harry Theoharis use to help the near-bankrupt Greece update its undecipherable tax code, root out corrupt inspectors and find an 'astonishing' number of rich tax evaders?

ATHENS — Greece is pinning its hopes of boosting revenue from an antiquated tax system beset by massive evasion on Harry Theoharis, a boyish-looking 42-year-old who describes himself as an "IT monkey."

With Athens fighting to stave off bankruptcy, the former London-based technology manager for Lehman Brothers is tasked with modernizing what is effectively a 19th-century tax bureaucracy and bringing it up to eurozone standards.

"I'm not the type of person who will lock himself up in his tower and not talk to anyone," Theoharis told Reuters. "We must organize services better and cut routine procedures."

Theoharis had long left Lehman Brothers when the U.S. investment bank collapsed in 2008. But this event set off a worldwide crisis that in 2009 helped bring down Aspis Pronia, a Greek insurance group where he was chief information officer.

During the crisis, Greek tax revenue also collapsed as the economy spiraled downward, compounding the long-standing problem of evasion and forcing Athens into an international bailout.

Last month, Theoharis was appointed Secretary General for Public Revenue — a powerful job Athens created at the behest of its lenders at the European Union and International Monetary Fund. His job is to rid the tax service of political meddling and remove underperforming officials as part of reforms prescribed in the bailout deal keeping Greece afloat.

Previously, as chief of the finance ministry's data service, he introduced innovations such online payment of road taxes. An avid user of Twitter — where he described himself as the Information Technology monkey — he tweets taxpayers at one in the morning and yet appears clean-shaven on TV talk shows six hours later.

"The budget and the bailout plan are setting clear targets. Everybody will be measured against them, every quarter," Theoharis said in an interview at his modest office in the finance ministry.

His appointment shows a realization that computerizing the antiquated, paper-based tax administration is the way to cross-check scattered data and help to uncover large-scale tax fraud.


Greece's revenue collection reform has so far disappointed its lenders. In a report last month, the IMF said the rich and the self-employed were continuing to evade taxes "on an astonishing scale."

Middle-class wage earners and pensioners, the hardest-hit group in Greece's six-year recession, account for 70 percent of total personal income declared, deepening a sense of injustice and resentment against Greece's pro-EU/IMF government.

In 2011, about four in 10 taxpayers declared annual incomes below the poverty line of $8,900 for single people or $18,462 for four-member families — twice the real poverty rate of 21 percent estimated by the Greek statistics agency.

More than 90 percent of all businesses declare losses or profits below $13,378 a month. Even at the height of Greece's debt-fueled economic boom in 2007, a tiny 0.1 percent of firms accounted for more than half of total corporate profit.

Pushed by the EU and the IMF, Greece is to unveil a much-delayed overhaul of the current, corruption-prone system and tax code later this year.

Vassilis Korkidis, chairman of the ESEE union of retailers, wants to be rid of the current system. "Enough with that rag from the 1950s, which is impossibly complicated and just fuels corruption," he said.

The ESEE has suggested a series of high-tech measures to fight tax evasion, such as connecting shops' cash registers online with the finance ministry, introducing electronic invoicing and digitalizing fuel station pumps to combat smuggling.

A 14-member committee set up by the finance ministry is separately drafting a new tax code with simple accounting and record-keeping rules. These would replace often contradictory tax legislation that has piled up over decades, scaring investors and thwarting business projects.

"You have to consult the tax code to check how to deduct 100 euros ($138) for a purchased couch," said Apostolos Refenes, a member of the committee that brings together Theoharis and a deputy finance minister with experts from the government, business and universities.

A summary of the current tax code has swollen to more than 2,000 pages, making it impossible even for honest businesses to comply and subjecting them to arbitrary checks by sometimes corrupt tax officials who demand bribes.

"We want no more physical contact with tax inspectors," said Korkidis, adding that even small firms needed in-house accountants to deal with the tax code and had to send employees carrying bags full of papers to tax offices to check.

This paper jungle is distracting inspectors from tackling tougher but more lucrative tax cases, such as wealthy lawyers and doctors, where audits are producing revenue far short of targets, the EU and the IMF said in a December report.


Theoharis plans to merge tax offices to pool resources and make the system more efficient. However, other reforms will be harder, such as replacing underperforming tax office bosses who are politically connected or scrapping same-size-fits-all civil service rules to reward inspectors who bring in revenue.

"There will be stiff resistance, both from within the tax administration and the political system," said Diomidis Spinellis, a technology professor at Athens university who was Theoharis' former boss at the finance ministry.

"It will be very difficult to change things," said another official involved in the tax reform talks who declined to be named. "Even if we assume there is political will at all levels of government, people with actual experience on how things could work differently are very thin on the ground."

To make matters worse, public sector wage cuts of up to 30 percent have demoralized Greece's untrained and over-aged tax officials, who must now learn from scratch how to raise taxes instead of blindly following formal procedure. "Many have just stopped working to protest the wage cuts," Korkidis said.

Even Theoharis sounds circumspect, when asked if he thinks he can make full use of his new powers. "It will be difficult. We'll see," he said, shortly before ending the interview to receive the IMF's resident man in Greece, knocking on his office door.


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