Tax Evasion Dogs Greece

Yahoo Finance (WSJ) ^ | February 10, 2010 | Sebastian Moffett and Alkman Granitsas

[Cheap_Hessian]

Greece has one apparently simple option for reining in a budget deficit that has roiled financial markets: Clamp down on widespread tax evasion, which costs the country an estimated €15 billion ($20.5 billion) a year, an amount that would pay off a big chunk of the budget deficit.

The trouble is, tax evasion in this Mediterranean country is extremely difficult to eradicate.

Trying to cope with its budget problems, Greece announced new austerity measures Tuesday.

Finance Minister George Papaconstantinou said public-sector salaries would be frozen and supplemental incomes for civil servants cut by an average of 10%. Salaries and bonuses for the prime minister, senior government officials and officials at state-owned enterprises will be frozen, and under some conditions reduced.

The measures would save some €850 million this year, said Mr. Papaconstantinou.

The government also announced a higher marginal tax rate of 38% on people earning more than €40,000 a year, up from about 25%.

In addition, dozens of tax loopholes and special rebates will be eliminated, and taxes will be increased on dividends and offshore companies. The tax measures would yield some €1.2 billion in revenue this year, the government said.

[proxy_user]

So this is really a backdoor way to cut the salaries of civil servants and unions? They pay them, but tax them more, and they are the only ones impacted since their salaries are on the books.

[N. Theknow]

Tax revolt started by Greek dogs.

[FormerACLUmember]

The Greeks have long since adjusted their lives to far left thieving rulers.

This wonderful country is otherwise a hopeless economic basket case.

Ask any Greek diner owner you know.

[Oldexpat]

Raise the taxes high enought and people will always find a way to evade them. Same thing is happening in CA. People want to work for cash and declare no income..or just enough to get the earned income tax credit.
A uniform flat tax would solve a lot of this, but the politicians will never give up the graduated tax with exemptions they can manipulate to get votes.
These high tax and spend countries are broke and our states with the same habits are broke. Any message there?

[C19fan]

A third of Greece’s economic activity is under the table.

[Cheap_Hessian]

"This wonderful country is otherwise a hopeless economic basket case."

When I visited Greece, they seemed to have decent businesses, restaurants, and activity, however, they also had visible protests, strong unions, and excessive bureaucracy. Crete was a little more backwards, but not terrible.

[BenKenobi]

Gee, I wonder if the solution is to cut taxes, and decrease the benefit associated with evasion...

But I’m just a crazy reactionary.

[pepsionice]

I’ve had three vacations (two weeks each) in Greece, Crete, and Cyprus. I enjoy the trip each time, but I’ve made lots of observations. If you need a roof put up...you barter and do it under the table. If you need a brick wall put up...you barter. The government doesn’t get it’s expected money.

Then you come to government workers. I doubt that any government within the entire government has ever put in a true 40-hour workweek....or even 35-hour week. If you went around counting the fifty government workers under one boss...you’d probably find that eighteen of them simply aren’t in the building at any given time.

Then onto the art of tax dodges. You start a house but it might be ten years before it’s done. None of the work ever is done on top of the table.

Frankly, if it wasn’t for the tourist trend...I doubt that they would have survived to this point. If you notice from last year....tourism from Germany to Greece did drop to some extent. I think they’ve milked every ounce of tax revenue out and they’ve basically spent every Euro. So now...it’s reality and they can’t make it.

[lafroste]

I read an article once that said if Italians paid 100% of the taxes they owed legally, they would pay 140% of their income in taxes. The tax responsibility cuts both ways: people need to pay their taxes but the gov’t must insure that those taxes are just and sustainable. If the government taxes its citizenry unreasonably, then the only option is to be a tax cheat.

[loveliberty2]

Common sense at work! When government becomes oppressive, people find ways to keep as much as they can of what they have earned by their own labor.

Glenn Beck spoke of this "underground" effect yesterday, pointing out examples today, such as Oprah's finding a way to avoid California's high rate, and others doing the same.

The human will to survive and reduce their level of slavery to government is enormous, driving wealth underground in order to allow a degree of liberty to those who work and earn.

Reduce the taxing rates and watch what happens. The so-called "intellectual" Far Left in America is truly ignorant of basic economic realities of history.

[riri]

The further south you go in Europe the less they partake in the real economy and use the back door economics of the black market.

There is nothing that can be done to prevent it. Mao couldn't keep a lid on the black market even with the informants, midnight arrests and work camps as deterrents.