Friday, June 8, 2012

Greeks Teaches the World a Lesson in Tax Avoidance – The Best Laid Plans of Mice and Men etc.

It Used to Be Greeks Didn’t Want to Pay Their Taxes – Now Thanks to Policy Imposed on Them They Cannot Pay Their Taxes

The inhabitants of southern Europe are anti-tax to an extreme that puts them ahead of even folks like Grover Norquist and the ‘best government is no government’ Conservatives in this country.  For decades citizens of countries like Greece and Italy have awarded themselves a tax cut.  They have done this by simply not paying the taxes.

Now that Greece is in dire fiscal straits the government is charged with not just implementing taxes, but collecting them as well.  So earlier the Greek government imposed a real property tax, and came up with the clever idea of attaching the tax bill to the electric utility bill.  Neat idea or so it seemed, the electric companies would collect the money and those who did not pay would have their electricity shut off.

Didn’t work out as planned.  First of all Greeks mobilized to find a way to pay their electric bill, not pay the property tax and not have the electricity cut off.

When the Greek government surprised homeowners in September by imposing a new national property tax, the mayor of this down-at-the-heels suburb on the western fringe of Athens sprung into action—mobilizing against it.

Stavros Kasimatis opened his office to poor residents who refused to pay the tax, which had been added to electricity bills in an effort to boost Greece's woeful rate of revenue collection. Municipal workers told the residents to pay only for power, then helped them fill out legal paperwork asking a judge to prevent the electric company from shutting off the lights.

Of course, a lot of Greeks decided just not to pay the electric bill, producing this result.

Resistance to the levy caused a rapid spike in overdue bills at the power company. That so aggravated PPC's cash crunch that the government has let the company hold on to about €260 million of tax revenue it collected in the spring, says George Angelopoulos, PPC's chief financial officer. That money has to be repaid in June.

And things have reached the point where the average Greek simply can no longer afford to pay the tax, that austerity thing again.

Up on the edge of Korydallos, where the concrete buildings peter into a hillside carved up by old quarries, Agapi Mandaka is running out of money.
She said she and her husband, an electrician, saved for years to build a block of three apartments for themselves and their adult children. He died seven years ago. Ms. Mandaka lives on a pension of some €900 a month.

The apartment building is unfinished. The stairwell is uncovered concrete. She said she ran out of money before she could install an elevator. The construction loans eat up about two-thirds of her pension. She owes €102 to the grocer and €303 to the water company.

Her property tax bill is €1,045.80. She didn't pay.

One would think the policy makers in Berlin who are imposing austerity on Greece would understand the ineffectiveness of all of this.  One would be wrong.

1 comment:

  1. that is interesting. Tax payers have to think about that.