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Greeks set to face heavy fines if they don’t spend 30 per cent of their income electronically

“This is a big initiative next year that will either raise more revenue because [people] will pay the penalty or more likely because of the [higher] VAT receipts,” Mr Patelis told The Telegraph.

The revenue predicted is likely to be at the “lower end” of estimates and the country’s banks will help impose the measures by reporting spending to the authorities.

If a Greek earned €1,000 per month and only paid 15 per cent of their income electronically, they would pay a fine of around €400 every year, for example. The government is confident it will not drive more workers into the country’s booming shadow economy and tempt them to understate their earnings, a key problem in Greece.

Greeks can use debit cards, credit cards, bank transfers and ecommerce for the electronic transactions, which includes rent.

But many workers are paid their wages in cash, which they then use to pay their rent and bills. Greece also has one of the lowest internet usage rates in the EU at 72 per cent. This suggests that some in the country could struggle to meet the 30 per cent target.

Southern Europe, particularly Greece, have booming shadow economies. A study by the Institute for Applied Economic Research in 2017 found that Greece had the largest in the world, being equivalent to 22 per cent of gross domestic product.

Individuals and businesses are enticed to under report earnings and avoid taxation due to high rates and cumbersome bureaucracy.

The Greek government expects to raise more than €500 million each year from the initiative.

The Greek government expects to raise more than €500 million each year from the initiative.Credit:AP

Tax evasion has been labelled a “Greek national sport” and it was estimated in 2016 to cost the country’s coffers up to €16 billion every year, largely through fraud on VAT or income tax.

However, Mr Mitsotakis’ government is cutting the tax burden of workers and businesses in an attempt to shock the Greek economy back into life.

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