It looks as if the total amount of uncollected taxes, included the Value Added Tax, in 2009, is more than twice the amount of austerity measures Greece needs to take in order to receive the next trance. That was the result of an academic research published a week ago. €
Uncollected taxes 2009: 29 billion euro
Austerity package (2.bailout): 11.5 billion euro
Bailout tranche: 31 billion euro
This is the result of an academic research conducted by two economists at the University of Chicago and one academic from Virginia Polytechnic Institute. According to the survey, tax evasion in 2009 only reache din Greece 28 billion euro.
“Leading in tax evasion are self-employed professional groups like doctors, engineers, teachers, accountants, consultants and attorneys. Cornerning employees, the list is led by media people, and freelancers at tourism and restaurant sector.”
The research leads to a very interesting conclusion: the weakness or indifference of the state apparatus in identifying hidden income related to the fact that the majority of Members of Parliament belonging to the Greek five occupations are champions evasion.
Broader attempts to crack down on the professions were blocked last year by the Greek parliament. MPs voted against a bill mandating tax audits on people who had incomes below a minimum threshold. The bill targeted 11 professions, including vets, architects, engineers, economists, doctors, lawyers and accountants.
They said: “Half of non-lawyer parliamentarians are in the top three tax-evading industries, and nearly a super-majority in the top four evading industries.”
The survey is based on data collected by Greek banks and it’s an in-depth study of how Greek banks, politicians and professional workers behave.
Primary Greek Tax Evaders are Professional Classes
Interestingly, their report, Tax Evasion Across Industries: Soft Credit Evidence From Greece, which documents the hidden, non-taxed economy, blames the current malaise not on dodgy taxi drivers or moonlighting refuse collectors, but on the professional classes.
They found that €28bn (£22.4bn) of tax was evaded in 2009 by self-employed people alone.
As GDP that year was €235bn and the total tax base was just €98bn, it is clear that this was a significant sum. At a tax rate of 40%, it amounted to almost half the country’s budget deficit in 2008, and 31% in 2009.
The chief offenders are professionals in medicine, engineering, education, accounting, financial services and law. Among the self-employed documented in the report are accountants, dentists, lawyers, doctors, personal tutors and independent financial advisers.
The authors, Adair Morse and Margarita Tsoutsoura from the Booth school of business at the Univeristy of Chicago and Nikolaos Artavanis from Virginia Polytechnic Institute, were given unprecedented access to the records of one of the top 10 Greek banks. They found that, when professionals approached the bank for a loan or mortgage, their tax returns showed their debts almost exceeded their incomes ( debt payments ate up 82% of their incomes). For the beleaguered tax authority, this meant their income was too low to qualify for income tax.
On average, they found the true income of self-employed people to be 1.92 times their reported income. Under generally accepted loan criteria, home ownership figure than the UK (80% versus 68%).
The customers would need to show that their debts, after their mortgage payments were taken into consideration, were less than 30% of their income.
To emphasise the global scale of the problem, the authors point out that World Bank studies show that 52% of corporations worldwide hide some of their income from the tax authorities, and 36% of European companies do so. Corruption is everywhere as companies and individuals seek to preserve their status, incomes and standard of living. (Guardian; Full Research Here)
The rampant tax evasion taking place in Greece right now can be effectively reduced by cross checking assets with stated incomes using ITS (Information Technology Systems) and with the cooperation of the Greek people and other nations. New laws to be passed by the Hellenic Parliament might worth less than the paper they’re written on, if they don’t close existing tax loopholes and reduce the number of tax exemptions. The inability and the incompetence of the government to colect the taxes due triggers pension, salary and benefit cuts, an unemployment increase and the worsening of the ongoing recession. The outlook of the Greek economy will look promising if the tax cheats realize that the odds of getting away with it aren’t in their favor.
Meanwhile and after 2.5 years of cuts//measures/tax hikes and collapse of public services, also a large part of employees and pensioners wish they could cheat, not only because they have no money left to pay taxes but especially in order to show the government what they think of it.
And of course also because they see those who have the means of solving the problems the country is in by pulling their (tax) weight get away with what they are getting away with. And if the big fish can do, why wouldn’t the small one try it as well…
The biggest problem is that as stated above in this article.
“The research leads to a very interesting conclusion: the weakness or indifference of the state apparatus in identifying hidden income related to the fact that the majority of Members of Parliament belonging to the Greek five occupations are champions evasion.”
“Broader attempts to crack down on the professions were blocked last year by the Greek parliament. MPs voted against a bill mandating tax audits on people who had incomes below a minimum threshold. The bill targeted 11 professions, including vets, architects, engineers, economists, doctors, lawyers and accountants.”
They said: “Half of non-lawyer parliamentarians are in the top three tax-evading industries, and nearly a super-majority in the top four evading industries.”
“The research leads to a very interesting conclusion: the weakness or indifference of the state apparatus in identifying hidden income related to the fact that the majority of Members of Parliament belonging to the Greek five occupations are champions evasion.”
This paragraph here is the one that seals Greece’s fate. Money will continue to be borrowed on the backs of the future. It is easy to blame Germany or the banks or capitalism (even though they are part of the problem), but once politicos are part of the problem then they will not be part of the solution.
A solution would be to allow all people to claim back taxes on all purchases, all they need is a receipt, no receipt no claim. This would force people providing a service to give a receipt, then providing a measure of wealth of the provider. Once everything is done in cash there is no way to track it.
What is really tragic is all those who have committed suicide due to the circumstances they were put under because of the current situation in Greece.
Therefore all the above worst offenders of tax evasion are also guilty of manslaughter and murder.
It is unpatriotic for a Greek to cause the death of another Greek in such circumstances.
So for the guilty the state should first confiscate their passports and ID papers put them under house arrest and then their properties and sell them if they can not get their money that is due to the state.