Tuesday, October 23, 2012

Greek Taxes, Greek Myth

WARNING: another rant
A current myth is that the Greeks are a dishonest, tax-evading people.
The truth is more complex and much worse.
First, the economic problem in Greece has very little to do with the general population evading taxes; it’s far, far more due to Greek politicians making off with literally hundreds of billions of Euros of the country’s money. The former defense minister alone is charged with looting 10 billion with a “b” and stashing it in a Swiss bank. (His lawyer says all these charges will be cleared up when his client appears before the judge. When will that be? Whenever his client decides it will be. Oh, and nobody, nobody will tell the defendant what to say or what questions to answer.) Even more, the economic problem has to do with irresponsible borrowing by the government and irresponsible lending by Greece’s creditors. Taxes are a miniscule, microscopic part of the problem.
Second, most taxes in Greece can’t be evaded. They’re sales taxes. You pay at the counter.
Until two years ago (years after the onset of the economic crisis), there was no property tax for most people. Only the largest dwellings were taxed, and ordinary people like you and me couldn’t afford such properties and/or took care to keep their dwellings smaller than the taxable size. So when you hear about people in the suburbs of Athens with unreported, taxable swimming pools, that’s only the ruling elite (and to this day, nothing has been done about that, nor ever shall be). That’s a red herring; that’s a distraction from the real problem. Most people did not evade property taxes because there weren’t any.
Nowadays, everyone pays is supposed to pay property tax. It’s collected for the government by the electricity monopoly company and is included in your electricity bill. You can’t evade this tax unless you want your electricity turned off. Or unless you are rich and privileged, I suppose. “The golden key opens all doors.”
There is also an income tax. Pensioners and government employees (together, about half the population) have this tax deducted from their paychecks, so they can’t avoid this one, either. The other half of the people can.
There are no private tax preparers in Greece similar to H & R Block or People’s in America. The tax-preparers and the tax-collectors are one and the same and they are much like the despised tax-collectors of the New Testament: they work for the government and they guesstimate decide how much tax you owe. The decision is entirely or almost entirely arbitrary because it has to be; there’s no method for it to become otherwise. Very often, the official takes his unofficial cut and that cut is whatever he determines it is. Often it’s highway robbery. Usually a bribe love offering can lower your “taxes” a little. In short, you couldn’t possibly design a system better suited to encourage tax evasion!
And this is not by accident. There’s no reason a government of today couldn’t, if it wanted to, set up some reasonably efficient, modern, non-arbitrary (and dare I add fair?) system of collecting income tax. The only reasons not to are:
  • if the government wants to steal the money
  • or to use tax evasion as an excuse to grab even more control over the people
  • or government employees just don’t want that much work.
All of these are happening here in Greece. (“We have governed very sloppily casually,” said Mr. Venizelos, the finance minister, attempting to explain the disappearance of a document listing 30-odd alleged thieves in high office.)
When you lose faith in your government and conclude, as perhaps most people here have, that it is not a legitimate government but only a crime ring, then you begin to think there’s no use supporting it with your taxes. There’s also no use obeying unjust laws. And then a weird thing happens: you begin failing to distinguish between just and unjust laws and wonder why you should obey any of them. Why pay my parking ticket, you may ask yourself, if the money is going to line the pocket of some already rich thug? And so law loses its moral authority and it all unravels.
Luckily for Greece (and Italy and Ireland and Portugal and Spain and other once-prosperous countries of Europe), the EU is ready to step in and knit everything together again, all into one, common, privately controlled regime. You just have to hope your country can survive its membership requirements meanwhile. Better still if it cannot, since the existence of individual nations, we are told, is an obstacle to the dream of a United Europe.


GretchenJoanna said...

Wow...thank you for a clear and first-hand report/analysis.

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