Politics: correcting Greek tax foolishness

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Domestic political debate has been centered around a new tax code which will be passed in January. The leaks, the back and forth and the excuses show that Greek political parties and their economic experts have been behaving like accountants juggling numbers without a vision for the national economy. To avoid the tax foolishness we believe proper solutions can’t be found without sound policy and we outline six guiding criteria for less illogical taxation.

Economic staff from the time of Prime Minister Costas Simitis consider themselves accountants. They think in only tables and number and because they can add as accountants they believe that is also good enough for them to be good Ministers of Finance. If politics was accounting then we would have Grant Thornton as the Minister of Finance and not Yiannis Stournaras since we would look for the best.

In theory policy and politics are different from accounting because policy requires deliberation. That means that policy should try to move things in a certain direction differentiating goals from other alternatives.

The second fundamental aspect of policy and politics is that there must be choice which numbers alone will not lead to by themselves but rather is informed by ideology. The third characteristic of policy and politics has to be this selected ideology. An apolitical policy does cannot exist because it is just an accounting exercise.

So instead of this whole mess on a new tax code with leaks, back and forth and leading statements, what should be presented is a bill that incorporates these six simple criteria:

- A common uniform tax rate for personal and corporate income at 20%.

- Rolling back Value Added Tax levels to where they were in 2008.

- The ability to fast track negotiations to settle open back tax matters after waiving all criminal penalties for those matters.

- Tax free status for three years for any newly established business whether it’s a small kiosk or a major multinational giant.

- No more bureaucratic red tape. All declarations to the tax authorities should be considered binding and final as long as the tax payer has signed them. If the tax payer provides inaccurate data shown up by an audit then the law should be imposed as swiftly and as tough as the US Internal Revenue Service deals with such issues without foot dragging.

We may be unpopular with accountants given the above opinions, but Greece also has to live as well. What we saw in the much leaked new tax code was not logic but tax foolishness.

PS. Prime Minister Antonis Samaras should not bury his head in the sand and pretend the new tax code is logical. He should prove that he understands and applies the three fundamental criteria of policy and politics as we sketched out above. Samaras deliberation must be to save the Greek economy. He must chose in favor of Greeks. Ideologically he must commit to a free economy with rules respected by all.

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