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Live your Business-Myth in Greece: €1,000 Poll Tax & 35% Flat Tax for Self-Employed

“It’s a new dawn, it’s a new day, it’s a new life, for me. and I’m feeling good!”  Nina Simone used to charm us with this wonderful song and the marvellous lyrics. But this is something the troubled Greeks cannot claim. On the contrary. With every new dawn, with every new day, they wake up to hear an additional tax is going to fall on their heads.  

Greek media report on Wednesday morning that the Finance Minsitry considers to impose a poll tax of 1,000 euro to some 800,000 self-employed. This tax will be ‘balanced’ with the flat tax of 35% the self-employed will have to pay most likely as of 2013, when the new taxation system will be implemented. Talks of the last days were claiming, that self-employed will be taxed with a flat 35% and thus from the first euro of their net income. The flat tax is claimed to part part of a tax system reforms that will also abolish any tax free amount for self-employed and freelancers.

Examples: Flat Tax & Poll Tax 

A self-employed with 10,000 euro annual revenues will pay 3,500 euro (10,000×35%= 3,500 tax).

A self-employed with 2,000 euro annual revenues should pay 700 euro (2,000×35%=700 tax), With the poll tax, he will have to give additional 300 euro to the tax office to meet the  1,000-euro poll tax requirement.

The poll tax is thought to replace the annual trade fee of 500 euro. An “emergency tax” imposed for the economic years 2010 and 2011. As ’emergency taxes’ cannot be implemented for more than two years otherwise they violate the Constitution, the trade fee should theoretically have to be abolished for the economic year 2012. It’s obvious that the Finance Ministry takes other options in consideration.

Apparently the new poll money targets to combat tax evasion, which is widespread among self-employed.

Self-employed as potential tax evaders

Thousands of  registered self-employed were found to have declared in 2011 much lower revenues than theoretically possible.

 457,389 out of the 779,316 self-employed declared to tax authorities less than 12,000 euro as annual income. In some sectors the income declarations urgently need psychiatric or criminal investigation:

–          14.715 hairdressers and owners of beauty parlours declared average annual income 3,916 euro.

–          30,197 bar owners declared an average annual income of  4,322 euro.

–          6,154 bakers declared an average annual income of  6,139 euro.

–          2,537 owners of hotels and rooms-to-let facilities declared 16,637 euro income per year.

Pharmacists, doctors, architects and owners of OPAP gambling shops declared more than 30,000 euro family income per year.

It is estimated that 9 out of 10 self-employed (almost 700,000 from a total of 779,316) declared family income less than 30,000 euro.

These data are published in an article about the allowances for families with children. I assume that they were given by the tax authorities. However they could also be controversial. For example, the income of a rooms-to-let owner is not unrealistic, then he traditionally rents one or two months per year. 

Also the two women owning a hairdresser saloon in my neighborhood were complaining last year that after payments of rent, utilities and business-loan tranches, they would hardly bring home more than 300-400 euro per month.  Both women were able to cover private expenses due to their husbands’ income.

Reactions to Poll-Tax & 35% Flat Tax

Both the 35% flat tax and the poll tax triggered angry reactions by self-employed who blame the state of ‘beating again’ the low and middle classes, giving bonuses to high earners.

  • Introducing a flat tax of 35% means that lower incomes will have to pay more taxes while while higher incomes (75,00+, taxed with 40%) will pay less. Currently incomes between 45,000-74,000 euro pay 35% tax.
  • Poll tax will hit low incomers as those paying more than 1,0001 euro in taxes will be freed from the trade fee of 500 euro.

It is claimed that the tax evaders declare average fictitious income of 3,500+, most likely of at least 5,000+. With the current taxation system incomes of 5,000 euro per year are tax exempted. However the tax free amount is expected to be abolished for self-employed with the new taxation system to be implemented in 2013.

  • It seems that until now, real big tax evaders from the class of self-employed declare income of 20,000-30,000 euro in order to be covered with the “deemed income criteria”. But nevertheless the real income is much higher.

Many doubt that the poll tax will manage to convert a tax evader of the lawyer or doctor category to a sincere taxpayer. Their income declarations are ‘ficticious’ in many cases as they declare the minimum amount required for a taxed income.

And all agree that these measures would rather skyrocket tax evasion than combating it.

PS I don’t know if the flax tax and the poll tax will be implemented at the end of the Greece-Troika negotiations, but it has been massively reported in the Greek media.

 

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11 comments

  1. You are absolutely right with the comment ‘And all agree that these measures would rather skyrocket tax evasion than combating it.’ That is already happening ….. as a shop owner I always give a receipt – but I have always had to ask other people for my receipts … especially tavernas (a rare luxury nowadays) I can’t see how we (small business owners) can survive – and what happens to those of us who are holding onto our businesses by the skin of our teeth – those of us that really are only earning the minimum!?

  2. asimenia – These tax increases are designed to implode the Greek economy slowly. I am sorry to say this. http://independence4wales.com/2011/controlled-demolition-of-greek-economy

    I think the fact that the government increases taxes rather than improving tax collection shows their complete disdain for Greek citizens.

    From my point of view there is only 2 ways this can end. Either the government defaults forcing the government to cut spending and taxes (This can only happen if the bailouts stop).

    or

    The Greek government “may” end up owning everything as they have seized people’s assets due to non payment of taxes. In a free society I don’t see how this could happen legally ie what jury could convict their fellow citizens who are in the same boat as them but then again, I never imagined the Greek polticians would do this to their own country.

  3. i own a small business.
    I HAD A PERFECTLY HEALTHY SMALL BUSINESS!
    I didn’t owe to ANYONE. i do now. I never stole from anyone. there is NO CASHFLOW. they are killing US! I have always paid my taxes. I ALWAYS give receipts.

    I am now saying BRAVO to anyone who can take their business and move it to another country like Bulgaria, Malta, Cyprus, Germany, UK etc. I now wish i had some money to move abroad.

    Fuck them! I AM REALLY ANGRY! I want to see when ALL the small businesses close in the end or keep going for as long as they can, without paying a single euro of taxes, how will they get the money they need to pay for government expenses, pensions, employees etc.

    What is going to happen? I bet that within 2 years, there will be a Greece, without any young people. A Greece that will be owned by foreigners. They can take Greece and shove it up their asses.

    I always hear on the TV, for the last 5 years, ALL OF THEM SAYING, save Greece, save the country etc.. Well, POLITICIANS, SCUM, ANSWER ME THIS. IS THERE GREECE IF THERE ARE NO PEOPLE? SAVE GREECE? WHAT DO YOU MEAN? SAVE THE EARTH, THE SEAS, THE MOUNTAINS? DON’T THE PEOPLE MAKE A COUNTRY?

    I am sorry. I am 36 years old, i am working my ass off 7 days a week, just to be able to pay taxes and business expenses which i have minimized to the max.. I will never have children the way things are getting and i am going to be taxed more because i have a business?

    Well, i should tax them! for me keeping my business here in Greece. For them to have the PRIVILEGE of me keeping my business here in |Greece.

    They are torturing us like we are in a video game. Let;s default and get it over with. Things will never be the same anyway. ENOUPH IS ENOUPH. I refuse to be manipulated by people who haven’t worked a single day in their lives.

    From a very angry Hellene.

  4. I hear you lela. You know, the only way to stop this rot is for all Greeks in the same position as you or asimenia to bond together and stop collectively paying these taxes. But… and yes there is a big ‘but’…
    When the ‘closure’ came along here, two years ago?, you know that thing where everybody had to pay from 500 to 10000 euro just to close their books. When honest people were blackmailed through the corrupt tax-system with audits and had to pay up. When crooks could just get out of any trouble for the same amounts? Well, then I asked my brother for advise. He is very experienced in stuff like this as he deals a lot with central Asian and other Third World countries. I asked him: “Should we pay, or refuse.” His answer was simple. “If there is a movement in Greece growing that is not paying these levies, you also can stop paying. But if not? Pay, because you will hang.” And with that he did put his finger on the biggest weakness of Greek society: there IS no society. It’s all about ‘me and my family’ and s**** the rest or just not trusting anybody outside ones own circles. Because “they” will s**** you as soon as you turn your back or take a stand.
    This lack of civil society and going together for a common goal has deep roots in history and it has served the Greek families well as it was often the only way to survive.
    But now it is turned into the opposite. There is no possibility to get a real struggle off the ground, like refusing to pay taxes in this way. And I still don’t see that changing any time soon.
    So the only thing I can do is hope you won’t go the way a lot of small businesses have gone the last couple of years: belly up with an enormous amount of debt to TEVE and no way to convince the local bureaucrats that there are rules and regulations that can help you in spreading those debts. Only for the nomenklatura, like we read in another threat. Only for them…

  5. I agree with you. I am a Greek Canadian and I am very angry, to see my country go down the drain, all because these big scum bags wanted to live the high life, and let there citizens suffer!

  6. Thank you for this insight and explanation – I have often been puzzled by the lack of solidarity. Greece is famous for its sense of close family but that doesn’t help start a revolution. And I am sure the same history is responsible for the appalling state of animal welfare in the country together with complete indifference to animal suffering – it’s not just because of poverty but due to the attitudes people had to adopt in order to survive. History repeating itself these days in that people are being forced to cheat the system they can see is cheating them.
    Why am I here?

  7. Something unrelated, is it possible to get emails when someone makes a comment on a post, that you have commented on? If so how 🙁 ?

  8. keeptalkinggreece

    sorry, we’ve not any such tool yet. maybe in a month or so…

  9. I am a 60+ American woman living in a small village in Greece. I have done what I had to do to stay legal here (as a non-European). I now will most likely have to leave as the people I work for (Greeks) will not buy my Ergosimou, which means that I will not be able to fulfill all the requirements to renew my visa. I am less than 5 years away from collecting my U.S. pension. My point – it isn’t just the Greeks that are having hard times – someone like me who spends all the money I earn( plus money from abroad as well) right here in Greece to keep the economy going is also suffering. I love this country but honestly, I have never understood the Greek people; they claim to have such pride and love for their country but then can not cooperate to keep it clean and pollution-free, they cannot act in symphony on even the smallest matters, they do not respect the animals that live in this country and put out rat poison for them when their animals continue to breed, because their owners will not take the responsibility to get them spayed and neutered. They have allowed their own politicians and civil servants and tax collectors to cheat and steal – I just see no hope for Greece until the people begin to think about the country as a whole, and stop thinking merely of themselves. I want to retire in this country, in my beautiful little village in the mountains but I will most likely be forced to leave a county I have lived in for almost 30 years. What a pity it has all come to this!!

  10. keeptalkinggreece

    Susi, of course, many foreign residents living here suffer from the crisis as well, but for reasons of ergonomy we write ‘Greeks’.

  11. The reality is that the EU is there as a wealth transfer device; the politicians/govt. employees took the money (in many cases literally) and it never got to the people. Now they will delay any adjudication as much as possible, just like the rich evaders. In the meantime, the German/French banks need their money so they don’t melt down, so the EU is looking to taking the islands (always part of the endgame) and bleeding more out of the lower/middle classes. Killing local businesses means privation. In Ireland, everyone who could get out did right after the crisis started…and it shows in their population figures. To paraphrase a Longshanks from Braveheart (speaking of Scotland), ‘the thing that’s wrong with Greece is that it’s inhabited by Greeks.’ The Germans felt that way in WWII and the rich bankers still do; if the Greek citizens leave, Greece will soon ‘rightly’ belong to those banks.