This had never happened before – at least not in Greece: that citizens take public servants as hostages and clash with riot police over tax evasion. There had been some incidents where residents of small communities attacked tax inspectors throwing stones. But clashing with police? Cutting water and electricity to a police station where tax inspectors took refugee? No.
Such scenes of unprecedented motivation took place just a couple of days ago on the beautiful and picturesque island of Hydra, an island in the Saronic Gulf, not far from Athens.
On Friday night, financial crime units (SDOE) detained the owner of a famous fish tavern for allegedly failing to issue receipts to customers and thus evading to pay Value Added Tax of 23% to the state. The owner claimed that he would issue the receipts when the customers would pay the end bill. But SDOE had a different opinion onthe issue.
When the tax inspectors took the restaurant owner to the police station, angry residents took the station under siege: They threw stones, firecrackers and flares at the police station and even cut the water and electricity supply.
Video Hydra incidents (Mega TV)
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On Saturday, the state sent riot police to the island in order to ‘free’ the tax inspectors from hostage. The riot police reached Hydra with a ship from the Navy. The still angry residents tried to hinder the riot police with the effect that the latter fired teargas to disperse the crowd.
Moving from dock to dock at Hydra harbour, the residents and supporters of the fish restaurant owner tried to prohibit that he is taken to Athens with the boat. And be taken to the prosecutor.
But the will and power of law were stronger than the residents’ outrage.
According to local media, eye witness defended their actions, saying that they had hardly work and that the tax inspectors “try to finish them off” by forcing them to issue receipts and paying the V.A.T. “We have hardly any work and yet we get arrested,” a bar owner said.
Give Caesar what belongs to Caesar
The case of restaurant, tavernas and bars owners not wanting to issue receipts is not unique for the island of Hydra and its 2,700 inhabitants.
SDOE found that seven out of ten businesses had committed tax evasions. In inspections conducted 6-23 July 2012, SDOE carried out 1,410 tax controls. 805 ‘offenders’ had committed 22,435 tax offences.
During tax inspections in the first two weeks of August, in 600 restaurants, bars, tavernas and other tourist businesses, SDOE found some 2,010 tax irregularities. In the majority of the cases, no receipts were issued.
If only the customer would profit from the tax evasion. Then the tax evasion tradition wants that the businessman charges the VAT to the end price of the product, without paying the VAT to the state.
Just recently a friend came back from an island of the Cyclades group. All businesses were issuing receipts and swearing at the same time. Why they issued receipts? Because SDOE had handed out a juicy penalty to a local souvlaki tavern for not issuing receipts. The news reached every businessman on the island who started to issue receipts, until the SDOE left.
Many businessmen in favorite tourist destinations refrain from issuing receipts. they blame the economic crisis and recession saying that their only chance to get some income is the tourist season. Why should they pay the Value Added Tax to the state?
Unfortunately they do not realize that if they do not pay the VAT, horizontal cuts in pensions and wages are inevitable.
Bad tax morals in a bankrupt country. Nothing changes. And things get worse.
The saddest part of the story is that the offenders seem to have no remorse whatsoever for their actions.
Greece has to carry out many structural changes in order to improve the productivity and competitiveness of its economy. By focusing like a laser light on accomplishing two primary goals the chances of seeing light at the end of the tunnel are going to increase. Namely, to privatize publicly held companies and organizations and in the process to make profits for the Greek taxpayers, and to reduce the rampant tax evasion.
According to the director of the agency persecuting economic crimes (SDOE) Nick Lekkas : “Tax evasion in Greece reaches 12 to 15% of GDP, that is €40-45 billion annually”. The restaurant owner in Paros and many others like her are to some extent responsible for the economic crisis Greece is facing right now. By not giving VAT receipts revenues are reduced, and the government is forced to either borrow money from abroad, or to reduce salaries, benefits and pensions, or to do both. As it’s already mentioned in the article, a couple of weeks ago SDOE performed random inspections throughout Greece and reported that 57.1% of the business owners committed tax related violations. The penalties for not giving receipts should range from stiff fines and license suspensions to license revocations for repeat lawbreakers. According to the Greek Ministry of Finance more than 135,000 tax related cases are still pending in the judicial system and the estimated tax revenues exceed €30 billion. Since it takes 7-12 years to issue the final adjudication, ways should be found to expedite the judicial process without restricting the rights of the Greek taxpayers.
Some greedy bankers and stock market gamblers, some very affluent tax cheats and some incompetent and unwilling Greek politicians aren’t the only ones responsible for Greece’s €19.5 billion budget deficit(2011), and the more than €300 billion public debt. Some Greek professionals, business owners, pensioners, public servants and many others who’ve committed tax violations, actually prevented the country from living within its means.
This has been the practice and reality in Greece for over 30 years. It started with the current generation of Greeks in Greece. Those aged from 30 to 60 years old.
They became obsessed with having a Mercedes Benz and the latest and most expensive furniture in their homes. And the jealousy mentality, if they have a 1000€ sofa. I will have a 2000€ sofa. But at what cost?
First they do not issue receipts in their businesses and secondly they cheat their employers out of their wages. They do not pay the correct IKA, they give them less money on what was originally agreed, they take almost 100% of the tips saying that they belong to the business and if it was not for the business they would not have a job and some tips. Yes they do give food to the staff to eat, but it is mostly spaghetti or kritharaki with left over meats in a tomato sauce. And they claim this as expenses to the business.
Only 10% of business owners are doing the right thing. The rest are money hungry, seeing how much they can make and then buy up other properties. While the average wage owner lives off the 600 to 700€ per month. And buying food and household products, at expensive prices. Over 1,00€ for the cheapest milk. I saw toilet paper from Kleenex at Masoutis at 8,00€ per 8 roll pack. While the business owners buy at wholesale price all their needs at METRO.
But i can see why some business owners do what they do. They say if the Public Servants and Politicians are steeling from the state from our money then we can give them less of our money.
It is a cycle, which happens everywhere, not only in Greece.
When people feel they are cheated by their public service and politicians they get angry and will give less and hide more.
It is economic practise if you want to stimulate the economy you cut taxes you do not increase them. This is the socialist practises of Europe. The trouble with Greece is that years of socialism has led to a huge debt which they now wish to pay down with other socialist mesures of increasing taxes. What Greece needs and all of Europe needs is less regulation and a return to capitalistic values and lower taxes. And maybe in the case of Greece no taxes at all for a while till the economy gets back on its feet.