Tag Archives: Greece taxes

A taxing issue for Greece

Greece’s tax collectors were told over the weekend that they would have to do a much better job this year at gathering overdue taxes. How much better? Almost 200 percent.

According to Skai TV, some 700 million euros was collected in 2011 by chasing down taxpayers that had run up debts. This year, inspectors will have to collect 2 billion euros as Greece tries to meet even tougher fiscal targets amid a deepening recession.

Preliminary figures showed that tax revenues were already 1 billion euros short of the government’s target in January alone, with VAT receipts showing a considerable drop. As consumption decreases, so do revenues, which makes it even more vital that any existing debts are settled.

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An EU force for the task at hand

For some, its presence in Athens is a clear indication that Greece’s eurozone partners want to run the country themselves; for others it is a confirmation that the European Union wants to offer practical help. Whatever your view on the EU Task Force for Greece, though, there are a couple of things that are undeniable: the team from Brussels is aiming to facilitate the disbursement of about 15 billion euros in EU structural funds over the next two years that would help Greek jobs and businesses, and it is helping provide expertise in areas of Greek public administration that suffer from chronic problems, such as tax collection and the judicial system.

The Task Force officially assumed its role in Greece on September 1 and recently published the first quarterly report on its work. It is made up of about 25 people in Brussels — led by the European Bank for Reconstruction and Development (EBRD) vice president Horst Reichenbach — and of 12 people in Athens. The Athens “antenna” is headed by Georgette Lalis, a Greek who has been a civil servant with the European Commission since 1981. She has held several executive positions but her last job in Brussels was as director of international affairs for energy. Between 2001 and 2004, she was CEO of the land registry (Ktimatologio SA).

Speaking to Kathimerini English Edition, Lalis distanced the role of the Task Force from that of the troika and identified a wide range of projects that it is cooperating on with Greek authorities, including a change to EU rules to provide Greek businesses with a working capital injection of 500 million euros.

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Cometh the hour, cometh the man

Illustration by Manos Symeonakis

In times of crisis, you need politicians that are level-headed, make well-judged comments in public and have an ability to empathize with pressurized citizens. Greece has Theodoros Pangalos.

The outspoken deputy prime minister provoked a strong public and media reaction when he claimed last week that he would have trouble paying the emergency property tax. Pangalos explained in a live TV interview that his bill would be particularly large as he had the misfortune of inheriting several properties. The PASOK veteran said he was being forced to sell one of these properties to raise money to pay the tax. When asked what he would do if he couldn’t pull the deal off, Pangalos suggested that Finance Minister Evangelos Venizelos might put him in jail.

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Memorandum II: The sequel – Dude, where’s my state?

Illustration by Manos Symeonakis

As Greece draws breath after voting for a new package of austerity measures likely to pave the way for another loan agreement with the European Union and the International Monetary Fund, this might be an opportune moment to identify one of the key faults with the first memorandum signed last year. Because, like a Hollywood sequel which follows a dire original, Memorandum II is likely to make us want to look away in horror.

There is plenty in the medium-term fiscal plan, or MTFP as it’s known in sequel speak, about reducing public spending. Greece plans to save more than 14 billion euros by 2015. This means, among other things, that the public sector wage bill will be cut by 770 million euros this year, 600 millon in 2012, 448 million in 2013, 300 million in 2014 and 71 million in 2015.

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Democracy in pieces

Illustration by Manos Symeonakis

In ancient Egypt they used ostraka – shards of pottery or stone – to record tax receipts. In ancient Greece they used them to record the name of a person who deserved to be exiled from Athens. These two ancient customs fused on Monday when Deputy Culture and Tourism Minister Angela Gerekou was banished from the government after it emerged that her husband owed more than 5 million euros in unpaid taxes.

The demise of Gerekou and her husband, aging popular singer Tolis Voskopoulos, is, in fact, not an ancient Greek drama but a very modern one. It has many of the elements that can be found percolating in Greece’s soft underbelly – the stardust of a music icon, the allure of a beautiful actress, a family dispute, missing cash and political intrigue.

For Voskopoulos, this week’s developments dealt a deathblow to a fading career and damaged reputation. During his heyday in the 1960s and 70s, he was such a star that if Greece had its own version of Bollywood, he would have been its sacred cow. A poor boy made good thanks to his ability to sing songs of pain and love, and act in maudlin melodramas, he suffered a series of failed marriages that drained his personal finances as the entertainment world began to pass him by.

Gerekou, who once posed for the Greek edition of Playboy magazine, was left embarrassingly exposed by the revelations that Voskopoulos had failed to pay an outstanding tax bill of 5.5 million euros. In another political era, under different circumstances, Gerekou’s job would not have been on the line. But, due to the economic crisis, we live in different times and the government’s apparent determination to clamp down on tax evasion meant Gerekou’s position was untenable. PASOK could not justify publishing the names of doctors yet to be convicted of tax evasion, as it did last week, when it was public knowledge that a minister’s husband had not paid his own dues.

Unlike the ancient persona non grata, Gerekou did not wait to be ostracized. By resigning, she recovered a modicum of dignity from a sad tale that goes to the heart of the political dilemma facing Greece. What is on the face of it a personal misfortune reflects, in a social and political landscape being reshaped by the crisis, the wider questions being asked about what behavior Greeks should accept from their politicians and how much accountability they should demand of them.

In their various ways, all the parties have recognized that steps must be taken with the electorate to rebuild the bonds of trust, which have been bent beyond recognition by the realization that the political system has failed Greece so spectacularly for so many years. The government has already started putting together proposals to ensure that politicians are no longer an unfairly protected breed. These include stricter checks on MPs finances and measures to make ministers more accountable. Justice Minister Haris Kastanidis has suggested changing the interpretation of the statute of limitations to make it more difficult for ministers to dodge prosecution for their actions.

All of this would be welcome but is not enough for Greece to truly hit the reset button. Much more radical changes are needed. They should include withdrawing politicians’ anachronistic immunity from prosecution. If politicians really want to win people’s faith, they have to be prepared to face up to the consequences of their actions.

There also needs to be a period of catharsis in Greek politics. The government has intimated it might launch an investigation into the handling of the economy during previous years. For it to be effective, it would have to span the period when PASOK was in power as well, not just New Democracy. And, rather than turning into a witch hunt, it should take the form of a truth and reconciliation process whereby offenders would ask for an amnesty in return for speaking openly. Restorative justice, rather than a lengthy legal process – which would lead to only some, if any, of those responsible for the country’s plight receiving sentences – is the best way for Greece to draw a line under yesterday’s failures, learn from its mistakes and then let go of the past.

Any attempt to appease the public, to curry favor with voters in the short-term in the hope that time will eventually dull the pain of what has happened would be disastrous and a complete abdication of responsibility. It would simply feed into the underlying anger directed at Parliament and the parties, putting off the explosion of rage for another day.

There is a dangerous atmosphere brewing in Greece, as a sizable section of the population is enraged by the country’s politicians – they are attacked when they go out for dinner, barracked when they attend public events and Parliament comes under siege during demonstrations. It would be catastrophic if through another display of immaturity and self-preservation, the current generation of MPs and ministers fueled the belief being peddled by some that politicians are exclusively to blame for all of Greece’s ills. Perilously, it would mean that fewer Greeks would be willing to take a look at themselves and understand how they have contributed to the breakdown of the country, making it too easy for them to look for scapegoats instead.

Even in a democracy as fresh and unblemished as ancient Athens, blaming someone, anyone, was not a foreign concept. Ostracism served many purposes in the city state. One of them was to make politicians more accountable and more determined to serve Athens well. But those casting the ostraka were not always doing so with the greater good in mind, as historian Plutarch recounted in the story of how statesman Aristides, known as “The Just,” was ostracized. Ahead of the vote, an illiterate citizen approached the politician, not recognizing who he was, and asked him to write the name “Aristides” on his ostrakon. An upset Aristedes asked: “Why, what harm has he done you?” The voter replied: “None at all. I don’t even know him but I’m sick and tired of always hearing him called ‘The Just.’”

Gerekou’s swift exit this week was symptomatic of the lack of patience people have with Greece’s politicians. This patience is wearing thinner by the day but token gestures will only exacerbate the problem. If the political system fails to reform itself and convince voters there is a deep, long-term plan to enhance transparency and accountability, then its members – the just and unjust – face an inevitable ostracism that would leave behind a power vacuum much more treacherous than today’s ailing democracy.

This commentary was written by Nick Malkoutzis and appeared in Athens Plus on May 21.