After talking to several people about the tax system in Greece, I (Ken) have come to the conclusion that it is actually an exaggeration to call it a "system." Only one person in my family (remember, I have 10 siblings and 29 nephews and nieces) has had has had a personal experience with fighting the IRS, and it wasn't fun. (Not because he did anything wrong, but he was a financial officer in a firm that went under.) But, overall, I don't hear very many horror stories about the tax system in the U.S. I have had no personal run-in with the IRS or occasion to feel like I was being treated arbitrarily. But this sort of arbitrariness/randomness seems to happen as a matter of course here.
Actually, the "information" we have been getting leaves us pretty confused, but I also gather that many Greeks feel the same way. We've already mentioned that one way for a merchant to avoid the 23% value added tax (only 13% for foodstuffs) is for him to sell you something without a receipt. And that many Greeks with swimming pools built them without paying the required taxes or permit fees and when the government began to crack down using aerial surveillance, many bought camouflage covers instead of fessing up and paying what they owed.
We've also learned that under pressure from the "Troika" (European Commission, IMF, and European Central Bank), the Greek government and/or bureaucracy is trying desperately to come up with new sources of revenue to meet the requirements for keeping the bailout funds coming. I often hear news stories that seem to be about tax changes, though I can't understand enough to be sure. But one friend (A.) confirms that the rules change frequently (mostly new or additional taxes on businesses and property, I believe). A. says that though he pays his income taxes--because he is unwilling to risk the consequences, even though they might not happen for a long time, he knows many people who simply don't pay. Either they don't think there is much risk of discovery or they don't think the consequences will be significant.
These are not marginal people but middle-class professional types. If the tax system does catch up with you, there seems to be some very arbitrary decision-making about whether you really must pay all that you owe, depending perhaps on the bureaucrat's sense of whether you have any ability to pay (They may be "arbitrary," but not "heartless"! :) ) A. says that the crisis has gutted the poor and is now working it's way up through the middle- to perhaps even the upper-middle class (I didn't get the distinctions clear, and am interpreting somewhat).
The other day, I talked to a young woman (Sandy, age 24) who does manicures. She has been attending a University, trying to get a degree in Marketing and Economics. The public universities here are free (tuition, that is; students still have to provide the necessities of life for themselves--lodging, food, etc.--as well as books, etc.). However, financial pinch is affecting the universities as well and the government doesn't feel they can solve the problem by starting to charge tuition.
If Sandy is typical, they are right. (She works 60 hours a week for what we think is about 600 euros a month, based on what other people have told us about salaries.) It is hard for her even to find the time to take classes, so she has been going for several years. But, Sandy also explained, the currently revised master plan of education calls for shutting down her university to save money (it's a smallish one). If that happens, she won't be able to attend another university because the free tuition is only for students who start at a particular U. before they turn 25, and she will turn 25 very soon.
On the other hand, I've been meeting a mature woman once a week who helps me with Greek and whom I help with English. Her family owns a business that sells high-end watches, jewelry, accessories, etc., both online and brick-and-mortar. They have 17 employees. She says that business has decreased, but that they are managing just fine. Particularly telling is that they have not had to lay off any employees. So, it seems that people with significant money are still doing OK. Sound familiar?
Other evidence of the doing-ok folks: The first evening she and I got together we met at a cafe in a decent part of town, but not fancy by American or Greek standards, I believe. I ordered a nice cup of hot chocolate, even though I was a bit surprised to see Starbuck's + prices (about 6 euros for the slightly larger-than-average mug!) And the cafe was full. (Chicken-and-egg question: Do the restaurants charge high prices for drinks because they know people are going to order one round and sit for a long time, or does the causal arrow point in the other direction? I don't know.)
PS From Kathleen. As mentioned in the previous blog, after our lovely dinner, we went to a cafe for after-dinner coffee. The place was jumping--full of young people, noise, and cigarette smoke (though it is technically illegal for people to smoke inside any public establishment, like so much else in Greece, it's more of a suggestion than an imperative). I did a quick scan of the scene.
Most surprising of all, our hosts told us, all these young folks--fairly upper class, given the charge for coffee and drinks--are jobless and probably living with their parents, again. (There's over 50% youth unemployment, even among college graduates.) They have nothing to do, so they spend their days, nights, and their parents' money living the good life.
Actually, the "information" we have been getting leaves us pretty confused, but I also gather that many Greeks feel the same way. We've already mentioned that one way for a merchant to avoid the 23% value added tax (only 13% for foodstuffs) is for him to sell you something without a receipt. And that many Greeks with swimming pools built them without paying the required taxes or permit fees and when the government began to crack down using aerial surveillance, many bought camouflage covers instead of fessing up and paying what they owed.
We've also learned that under pressure from the "Troika" (European Commission, IMF, and European Central Bank), the Greek government and/or bureaucracy is trying desperately to come up with new sources of revenue to meet the requirements for keeping the bailout funds coming. I often hear news stories that seem to be about tax changes, though I can't understand enough to be sure. But one friend (A.) confirms that the rules change frequently (mostly new or additional taxes on businesses and property, I believe). A. says that though he pays his income taxes--because he is unwilling to risk the consequences, even though they might not happen for a long time, he knows many people who simply don't pay. Either they don't think there is much risk of discovery or they don't think the consequences will be significant.
These are not marginal people but middle-class professional types. If the tax system does catch up with you, there seems to be some very arbitrary decision-making about whether you really must pay all that you owe, depending perhaps on the bureaucrat's sense of whether you have any ability to pay (They may be "arbitrary," but not "heartless"! :) ) A. says that the crisis has gutted the poor and is now working it's way up through the middle- to perhaps even the upper-middle class (I didn't get the distinctions clear, and am interpreting somewhat).
The other day, I talked to a young woman (Sandy, age 24) who does manicures. She has been attending a University, trying to get a degree in Marketing and Economics. The public universities here are free (tuition, that is; students still have to provide the necessities of life for themselves--lodging, food, etc.--as well as books, etc.). However, financial pinch is affecting the universities as well and the government doesn't feel they can solve the problem by starting to charge tuition.
If Sandy is typical, they are right. (She works 60 hours a week for what we think is about 600 euros a month, based on what other people have told us about salaries.) It is hard for her even to find the time to take classes, so she has been going for several years. But, Sandy also explained, the currently revised master plan of education calls for shutting down her university to save money (it's a smallish one). If that happens, she won't be able to attend another university because the free tuition is only for students who start at a particular U. before they turn 25, and she will turn 25 very soon.
On the other hand, I've been meeting a mature woman once a week who helps me with Greek and whom I help with English. Her family owns a business that sells high-end watches, jewelry, accessories, etc., both online and brick-and-mortar. They have 17 employees. She says that business has decreased, but that they are managing just fine. Particularly telling is that they have not had to lay off any employees. So, it seems that people with significant money are still doing OK. Sound familiar?
Other evidence of the doing-ok folks: The first evening she and I got together we met at a cafe in a decent part of town, but not fancy by American or Greek standards, I believe. I ordered a nice cup of hot chocolate, even though I was a bit surprised to see Starbuck's + prices (about 6 euros for the slightly larger-than-average mug!) And the cafe was full. (Chicken-and-egg question: Do the restaurants charge high prices for drinks because they know people are going to order one round and sit for a long time, or does the causal arrow point in the other direction? I don't know.)
PS From Kathleen. As mentioned in the previous blog, after our lovely dinner, we went to a cafe for after-dinner coffee. The place was jumping--full of young people, noise, and cigarette smoke (though it is technically illegal for people to smoke inside any public establishment, like so much else in Greece, it's more of a suggestion than an imperative). I did a quick scan of the scene.
Most surprising of all, our hosts told us, all these young folks--fairly upper class, given the charge for coffee and drinks--are jobless and probably living with their parents, again. (There's over 50% youth unemployment, even among college graduates.) They have nothing to do, so they spend their days, nights, and their parents' money living the good life.
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