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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10 απαντήσεις στο “Politics: correcting Greek tax foolishness”

  1. Even though I agree with most of the
    above, I think that it does not go far enough. Personal and business tax should
    be around 20-25% and sales (VAT) tax should not be more than 5-6%. Why should
    Americans pay an average of 7% and Greeks pay 23% in sales tax? Take a look
    here to see the average tax by state:
    (http://www.vidaamericana.com/english/salestax.html).

    High taxes only cause a deeper recession, slow down growth and reduce
    government income. Look at what happened at the fuel/diesel tax increase this
    year! It has been increased by 80
    Eurocents or about 80% but yet it brought less money to the Ministry of
    Finance.

    You are 100% right when you say that the people at the Ministry of Finance
    are just ONLY accountants and the only thing they see is numbers without taking
    into consideration the financial situation of the people. How can you collect
    taxes from people that are broke? Only by confiscating all their belonging and
    taking their house away, the most valued possession Greeks have.!

    The ONLY way out of this financial crisis is a reduction of all taxes so
    that the total tax does not, under any circumstances go beyond the
    30-33% (personal income tax 25% and sales (VAT) tax 8% ) and of course, NOT TAX
    whatsoever for all edible, dairy, vegetables, bread, Nutritional and Medical
    products) . It is inconceivable for a person that is wheelchair bound to have
    to pay 23% sales tax. Taxes should be imposed ONLY when you earn the income. What difference does it make if I drive a 1.4
    or 3 Litter car? The bigger the car, the more gasoline, more insurance, more maintenance,
    therefore spending more to keep a big car.

    As for the rich, they will pay their fair share, since they will spend more
    than the poor, because they will have a bigger car, a bigger house, they will
    buy more goods than the poor, therefore they will pay more taxes.

    I further agree with the above regarding tax incentives for new business
    startups and not subsidies. Subsidies bring corruption and they are used to
    manipulate people.

    There are many things that our government could do if they really want to
    make the Greek economy fire up once again and if they really want to make us Greek
    people to start believing in our government and start rebuilding our country.
    Greece has been around for thousands of years and NO ONE ever managed to
    contain it for long. Either the government starts paying attention to the people’s
    needs or the people will revolt. I hope that the revolt will never have to
    happen.

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