Tax Dodgers Cock a Snook

Barely 40% of unpaid taxes outstanding from tax inspections carried out in 2004, were recovered in 2005, according in a recent report of a parliamentary scrutiny committee.

During 2004 the tax authorities discovered a massive €12 billion in unpaid taxes and fines, of which only €4.5 billion was recovered.

It was little better for fines and penalties arising from court decisions, where only €506 million was recovered, from €1.7 billion of debt.

The vast majority of unpaid taxes and fines related to VAT and other business related taxes.

This poor level of recovery is an historic one, which has barely improved over the years despite the creation of specialist recovery units and the installation of expensive computerised systems.

Indeed, for taxes other that income tax, the level of recovery has actually worsened, with only 19% of debts recovered in 2005, against 26% the previous year.

The authorities also seem quick to throw in the towel if they are not able to obtain quick recovery of unpaid sums, with 10% of debts incurred in the year, actually written off the same year. Worse, only 15% of penalties are recovered within two years.

When asked by the parliamentary committee to explain their poor level of recovery, the Controller of Taxes had very little to offer, other than to state that by allowing the small fish to escape the net, the authorities were able to focus on the large amounts!

In a separate and more recent survey, the social security and tax authorities estimated that around 25% of of cafes, hotels and restaurants regularly undeclare the number of staff working in their business, resulting in billions of unpaid social security contributions.

Worst offenders were located in the Paris region, where around 60%(!) of those establishments inspected were found to be employing staff without declaring them to the authorities.