would have spent is another matter, for another discussion.
better spent is what I took issue with in GP's post. There are definitely things that individuals and the free market are better at judging, but I would not count infrastructure, basic education, and disaster/first response among those, to list a few off the top of my head. Considering that Greece was verging on broke a year ago, it wouldn't have been able to pay for any of its programs whatsoever, including both the waste-of-money ones as well as the essential ones. If the level of tax dodging in Greece really is at the levels that was reported in the media last year, I doubt cutting the waste would have been sufficient to put them in the black.
You can blame debt for the crisis, but debt was merely the acute symptom: the underlying disease was insufficient tax revenue to balance expenses. Whether that would better be fixed by increasing tax or decreasing expenditure is hard to say, but I'd expect it's a bit of both. Cutting waste AND fixing tax enforcement would have done a lot to put them in a better position, more than taking either of those actions alone.
More generally, I don't think the state should do everything. However, there are a minimum number of services it should offer, it being in the best position to do so, and when tax revenue is so low you can't even offer those, then I'd say that increasing taxes will produce a net benefit, in contrast with GP's implication that raising taxes never improves things.