8 ms·

Greeks set to face fines if they don't spend 30% of their income electronically

90 points by ur-whale 7y ago

chadlavi 7y ago
That's pretty messed up. What about the elderly and the poor? My grandmother (American) has never done one thing online in her life.
- pedro2 7y ago
  Credit cards counts as well. Probably cards in general.
  - astura 7y ago
    Hell paper checks would probably count.
- abracar 7y ago
  It's not just for online transactions - it says "debit cards, credit cards, bank transfers and ecommerce".
- mc32 7y ago
  Syriza was right and Varoufakis should have called the ECB’s bluff but instead the ECB knew Greece was just pretending to call the bluff and just let them hang. They’d have been better off if they had executed Grexit than be saddled paying off German banks.
  - coldtea 7y ago
    >They’d have been better off if they had executed Grexit than be saddled paying off German banks. Yeah, the scheme works like this: - Greek state was bankrupt - German banks and financial interests were over-exposed - Germany used EU and EU funds to "aid Greece". The funds are not used in Greece in any way, but to repaid the debt, so its basically EU -> Greece -> German banks. Germany benefits tremendously, Greece is merely kept on life support (still bankrupt, still with the same -and bigger debt as before the "aid", just with a credit line that goes straight to debtors, e.g. mostly exposed German banks), and Greek state is forced to sell assets for 1/10th the price for select German and other players (with political and economic pressure as to which those would be). - IMF piles on, pushing its own agenda (deregulation and other neoliberal/anti-welfare etc policies) So it's basically a swindle on the EU populations, to make them pay for German banks using Greece as an intermediary + a way to not let Greece default, but have it suffer a fate worse than default (mostly, selling everything to the lowest bidder and still being in the same piled-on debt). Well, that would be German elites. German people still paid like other Europeans for this scheme -- though the transaction also benefitted Germany economically, so somethings trickled.
    - hamilyon2 7y ago
      Well, not exactly. Debts of government were written-off about 50% https://en.m.wikipedia.org/wiki/Greek_government-debt_crisis https://en.m.wikipedia.org/wiki/Greek_government-debt_crisis As far as I know that means that creditors from northern Europe paid 50% of debts. This is organized default and a deal package that came with it. I wouldn't say German banks were exactly winners here.
      - bad_user 7y ago
        It's the same story in many countries ... populist governments increase public deficit via corruption and salary increases in the public sectors in order to secure votes for the next election, then get loans to pay said debt and then everybody blames the evil banks, FMI, EU, they blame anybody else but themselves for supporting corruption and populism.
      - Xelbair 7y ago
        get 50%, or lose 100%? which one you would prefer?
      - coldtea 7y ago
        >Debts of government were written-off about 50% That's a huge bargain for the banks compared to bankruptcy and its impact. And the Greek government (much less the people) still doesn't see that 50% write-off, since instead of defaulting and making a clean start with it, it's forced to take new lifeline loans, sell off assets at special ultra-low prices, and still repay everything. The current debt after a decade of "aid" is larger than the initial value - meanwhile their GPD has took an impact similar to that of war. For a private company or citizen, it would be the equivalent of not having the option to go bankrupt, but instead be sold to slavery.
    - disiplus 7y ago
      you are mostly right, there is a great book on this theme called "Crashed" "https://www.amazon.com/Crashed-Decade-Financial-Crises-Changed/dp/0670024937" https://www.amazon.com/Crashed-Decade-Financial-Crises-Chang... i't was the same story in most of the east europe. west banks where overexposed in the east europe, they pumped the "rising" markets in the east, and once the money stooped coming everything stopped. and now the west banks lobbied to give those local branches more modey so that they where not so exposed any more.
  - YeGoblynQueenne 7y ago
    I'm sorry but I have to disagree. A Greek exit from the Eurozone would have meant an economic catastrophy incomparable to what we have to endure now. For one thing, we are currently not technically bankrupt. In case of Grexit, we would be well and truly bankrupt. If I remember correctly, Varoufaki's stratagem was to claim that we would be better off outside the EZ and back to our own currency (the drachma) which we could devalue unlike the Euro. However, the drachma was valued to €340.750, when we joined the EZ [1]. That would have meant that our debt of ~€355.49 billion [2] we would have to pay 12,113,321,750,000‬ drachmas. Note that we would supposedly try to pay off this debt by devaluing the drachma, which means, by printing more of it. That in turns mean that we would have to carry out our internal transactions with a devalued drachma. I don't know how to calculate the devaluation that would be needed, but I think the predictions that we would be back to the WWII situation where a loaf of bread cost a trillion drachmas, that many made at the time, were not too wide off the mark. _____________________ [1] https://www.euro-hellas.gr/isotimia-euro-drahmis.html https://www.euro-hellas.gr/isotimia-euro-drahmis.html [2] https://en.wikipedia.org/wiki/Greek_government-debt_crisis https://en.wikipedia.org/wiki/Greek_government-debt_crisis Converted to Euros based on current exchange rate of 1 Dollar to 0.9 Euro.
    - mc32 7y ago
      Well, the idea was that Greece would default on their loans (not that they’d pay back in Drachmas). If not at least pay back a severely discounted debt like Argentina and others have done. It’s too bad he kinda chickened out and didn’t call the ECBs bluff. I say kinda because I don’t think he ever intended to execute Grexit as he had threatened, but was rather using it as “leverage” but they saw right through that. Syriza should have made him do it.
      - YeGoblynQueenne 7y ago
        Yes, we could default on our loans. Then we would be free to borrow more at an eye-wateringly high rate, given that we would have no trust left with lenders. And we would have to service this debt with a drachma worth less than the paper it would be printed on. I don't see how anything good could come from turning our country into a financial pariah.
- itismetheidiot 7y ago
  all above 70 are exempted
- smileysteve 7y ago
  > What about the elderly and the poor? If it's on income, wouldn't this group always be approaching 100%?
mosselman 7y ago
It is sad to see how hard life is made for the average Greek due to the economic sanctions they were hit with to save malpracticing banks.
- adaml_623 7y ago
  Ha. Widespread tax evasion is not the fault of the banks. If there is a country where a huge proportion of people work in the grey and black markets then normal government tax policies don't work. If governments don't have income then they can't do the things that they need to do. If you've got a country then I think by definition you require taxation, borders, etc.
  - inertiatic 7y ago
    Tax evasion isn't as widespread as you'd believe. Most people don't work in "grey or black markets" over here. Business do tax evade, most people can not and do not. There are ways to check on businesses and fine them appropriately without screwing your citizens. Unfortunately, that's not in the cards.
  - yawboakye 7y ago
    I might be oversimplifying. Tax evasion becomes necessary when one knows they'd lose more money (than necessary) to taxes, especially when the benefits of the tax has not been or cannot be felt. If that's the situation, taxing becomes an exercise of government just because of nation and economic theories. The way to solve that isn't to surveil earnings and spending. It is to make a good case for why people should pay taxes. And usually, it involves spending the current tax money well.
    - bad_user 7y ago
      > "The way to solve that isn't to surveil earnings and spending. It is to make a good case for why people should pay taxes" What makes you say that? Has that ever worked? IMO taxpayers should pay their taxes simply because they are citizens and that's the law. If the taxes aren't bearable or just or aren't spent wisely, then they should vote accordingly at the next elections. Tax evasion does in fact reward the corruption that has led to tax evasion. And the way to end tax evasion IMO is to (1) decrease taxes, as to make the burden bearable for everybody, but then (2) put tax evaders in jail, show no mercy.
hvenev 7y ago
I feel like this will only lead to more people not declaring their income.
- yawboakye 7y ago
  Ironically, the move is supposed to deter people from doing that. The article doesn't go into details about how it will be achieved. It'd be nice to see how the Greek public reacts.
- lotsofpulp 7y ago
  That can also be incentivized to go electronic.
- puPoh 7y ago
  Spot on. A lot of people have unregistered jobs. This kind of laws encourage a hard split between clear and shadow economy.
itismetheidiot 7y ago
The parliamentary financial evaluation committee has already declared it as unconstitutional. For those that still manage to save some of their income – a luxury for very few nowadays – the plans to tackle this were already though out. For example, a large purchase of a high end tv at the last day of the year, which then would be returned a couple days unopened. The ministry would be “happy” and your savings would not really have exchanged hands permanently. It mostly illustrates the inability of the government to be effective.
- postingFourFast 7y ago
  > It mostly illustrates the inability of the government to be effective. Be careful, the Financial Panopticon lobby is getting better at this at an exponential rate. Just look at how they reacted to cryptocurrencies. > a large purchase of a high end tv at the last day of the year, which then would be returned a couple days unopened. If the purchase is electronically receipted the return will be as well. All they have to do is change the wording from "purchases" to "net purchases". Or just issue a regulatory interpretation indicating that's what the legislators meant in the first place.
- icebraining 7y ago
  But was the goal to actually force people to spend money? Not just force it to be tracked electronically?
pleasecalllater 7y ago
I hope it's a joke, or something is missing there. I try to save as much as possible and I barely spend 25% of my income. Forcing me to spend more is not right. Maybe they were rather thinking about: move your money electronically, which would also include getting salary on a bank account, or wiring it there.
- docdeek 7y ago
  If I understand it, the point is to avoid cash transactions that cannot be taxed. One article I read pointed out that the 30% would include rent or mortgage payments, utility bills, and such things. Personally, I would find it easy to hit almost 100% of the transactions I make electronically - I use cash rarely now (living in France, no cash tips etc.). I think I would struggle to only spend 25% of my income, though. Even if I am saving a lot, once I pay rent, family groceries, utilities, phone and internet, I’d be past that. If you don’t mind to share, how do you manage to spend so little of your income? There’s always room for me to save more, and I’d love a couple of tips.
  - vinni2 7y ago
    He is probably well paid. I agree it’s hard to keep the expenses below 25% of income.
  - taneq 7y ago
    I'm guessing single person willing to live frugally, working in high paid tech job. That, or using different definitions and not literally saving 75% of take-home pay.
  - esotericn 7y ago
    It's trivial. You just need to earn 4 times your minimum spend and then do it. ;)
  - andmarios 7y ago
    Allow me to explain better. The 30% comes before any tax. Also it does not include payments for taxes, rent and other things. So, let's say I make €40K/year. My tax will be about €11K. Further taxes, such as owning some property, owning a car, can add €1-3K more. My rent may be €7K. So now, I have already spent ~€20K but this does not count towards this limit. I still have to spent €12K on various things (food, services, goods, which come with 24% VAT in Greece) or I get an additional 22% tax. It's madness!
yawboakye 7y ago
Seen another way, companies will have to provide electronic payment options. Hopefully there's follow up incentives to make electronic payments appealing. Credit card cash back isn't still a thing in EU (or at least Germany). That said, I don't know which is generally safer, cash or card, but in my own experience I feel more secure traveling/walking around with my bank card that cash. It's 2019 and there's still several places in Germany where you have to pay > 50eur bills in cash.
- YeGoblynQueenne 7y ago
  >> Seen another way, companies will have to provide electronic payment options. This is already the case in Greece. Even "periptera" (equivalent to drug stores in the US or corner shops in the UK) have to accept card payments and issue receipts, which was unheard of a few years ago. This was explicitly imposed to curb VAT tax evasion I believe. It was a measure insituted by the previous government, of Syriza.
- IMTDb 7y ago
  > Credit card cash back isn't still a thing in EU (or at least Germany) They will never be a thing in EU, under the current regulations. Cash back work because in the US credit cards charge very high transaction fees. IE: every time you make a payment, a portion of it goes to the credit card company. The The credit card company then gives some of that back to you (hence the name) to push you to use their cards instead of the competitors. By law, the transaction fees in Europe are really low, so the credit cards company have nothing to give back to you. Credit card is also a far less profitable business in Europe than it is in the US, that is why you see far less ads for credit cards offers.
YeGoblynQueenne 7y ago
>> Tax evasion has been labelled a "Greek national sport" and it was estimated in 2016 to cost the country's coffers up to €16 billion every year, largely through fraud on VAT or income tax. Although I've made this joke myself in the past, about tax evasion being our national sport, it's insulting to see it repeated by an Australian publisher. Personally, I've only had to pay taxes abroad, in the UK, where there was no opportunity to evade them (because they were directly deducted from my salary - I'm a PhD student now hence the past tense). I wouldn't really say I'm an expert tax evader. That said, any discussion of taxation and tax avoidance in Greece as well as the rest of South-Eastern Europe must also take into account the sorry state of public services, which tax money is meant to support. It's a chicken-and-egg problem, but it's easy to see why nobody would want to be the malakas who pays their taxes properly only for their tax money to disappear down the black hole of corruption before having any chance to improve the national health service, education, our roads, etc etc. Taxation makes sense when it's spent to improve and maintain the commons - not to line politicians' pockets. Of course, that's not absolving my fellow Greeks of responsibility. Corruption is high in Greece because we support corrupt politicians with our votes, and because we have done so for three generations since the "metapolitefsis", the change to democracy after the years of the military dictatorship (ended in 1974). To wit, Kyriakos Mitsotakis (the current prime minister, pictured in the article) is the second Mitsotakis to be prime minister, grandson of the first - and his mom is also an MP. And before him we had Papandreou I (in the '50s), II and III and also Karamanlis I and II to rule us (and all their friends and cousins as MPs). We keep voting the same "houses" in power and then complain that they suck us dry and destroy the economy. And then of course it's every man and woman for themselves. It's a fucked up situation and we are very much guilty for our choices over the years. But silly jokes about national sports don't help to get to the heart of the issue, or convey its seriousness.
- zorked 7y ago
  Not saying it's right but Canada had Trudeau I and II, the US had Bush I and II, and the Clinton and Kennedy families, so it's not like political dynasties aren't common in many countries.
  - 7y ago
ukoki 7y ago
Surely there are better ways to achieve this. Off the top of my head: * Force business to accept electronic payments. * Reduce the number of ATMs * Limit ATMs to lower denomination notes * Increase VAT for cash payments
- tonyedgecombe 7y ago
  Only allow businesses to offset tax against non cash expenses. You need something that will ripple through the system and encourage good behaviour.
- jbverschoor 7y ago
  - Improve mobile network - Force limits on transaction fees - Force banks to protect consumers with phishing, fraud and other scams - Lower taxes, and they will now be collected
- chrisseaton 7y ago
  > Increase VAT for cash payments People don't pay VAT on cash-in-hand payments, though do they?
  - tomcooks 7y ago
    In most EU countries they do, it's included in the final price. To find out whether the VAT money goes to the state as VAT or gets "forgotten" in the merchant's pockets is left to the student as extracurricular work.
    - chrisseaton 7y ago
      Have you seriously never had anyone offer you a 'discount' for a cash payment? Why do you think they're doing that?
      - icebraining 7y ago
        I live in a southern EU country, and that's very rare here, in my experience. The only cases I can think of in the last decade were home repair people. Even car mechanics stopped doing that.
Nasrudith 7y ago
That sounds like an ugly hack and I suspect that tax evasion reporter bounties would probably work better but I don't know their system and problems in details beyond "rampant tax evasion and loopholes in an economy that isn't as advanced as it should be". I had a related thought while having breakfast. A hypothetical transparent economy where everyone had open ledgers of transactions and how utopian or dystopian it would wind up. Money laundering still be possible in that system - any uncertain value fudged up or down in exchange for illicit hidden transactions would work for that practice.
- dsfyu404ed 7y ago
  >That sounds like an ugly hack and I suspect that tax evasion reporter bounties would probably work better Giving people an monetary incentive to rat on each other for something a large slice of the population engages in (to varying extents) almost always increases distrust and dysfunction in society. You can sometimes get away with it in some places where trust of government is very high and allegiance to local community is very low but Greece is not one of those places. Right now one of Greece's problems is too little trust in government (part of why people feel justified dodging taxes). Incentives like you described would be counterproductive.
  - Nasrudith 7y ago
    Hmm interesting perspective - I would have thought disrupting the "conspiratorial cohesion" as well as turning the greed of enterprises against them. Not what I would have thought.
ur-whale 7y ago
I am afraid that - while this is extreme - this is pretty much a taste of things to come for many industrialized countries. Cash is well on its way to being outlawed in many places, thereby giving states historically unparalleled control over their flock. Complete and detailed financial transactions are pretty much the least noisy dataset you can imagine to build a person's detailed profile.
defertoreptar 7y ago
Sounds like a case for swapping to land value tax if I've ever seen one. Can't hide land.
- mikro2nd 7y ago
  You can't hide land, but how do you determine 'value'? We have some such system for funding local government, and the values are, in general, an absurd fiction (in both directions) despite the legal theory that property values should be based on some notion of 'market value'. One trouble is that when the property market declines, local governments don't take that into consideration, and refuse to reduce property valuations, because that would impact their revenue stream in the direction they dislike.
  - defertoreptar 7y ago
    If you ask me, if this was to be done, s the following steps should be taken. 1) The government should commission an expert panel to investigate a system for assessing land value (or perhaps even crowd source it). A set of descriptors (size, location, if it's next to a sewer treatment plant, etc.) should be determined. Along with sale price records, a system should be designed to predict land values. B) Every part of the system should be public information, including the set of descriptors, so that individuals can dispute them and have them updated in the records. C) Per law, the system should be regularly reviewed and updated, so that it is as accurate as possible.
    - mitsakos 7y ago
      All of these have happened, in some degree at least. And yet it's still a mess. e.g. 1) That panel exists in a variety of forms. The problem is, how do you nicely estimate land value in an economy were real estate transactions are few (which is happening for the last 10-12 years or so)? In many places it's impossible to estimate due to the above, so the alternative is to rely on very old values which are going to be out of date and don't reflect reality. And you can't put 0 for the land value as that would mean 0 taxes and the state financial situation does not allow that B) That is happening. Dispute is problematic as it takes years for the courts (yes, with the exception of blaring mistakes, the state has no incentive to accept that a land value estimation is wrong, so courts it is) to come up with a decision (never mind the fact that it will be appealed anyway so even more time and money spent on this), but it is happening. C) Again, this is problematic due to the same reason as 1). There aren't really that many real estate transactions to accurately estimate land values. Everything went into a pause for years in a row.
why-oh-why 7y ago
Excuse me, what? If they know what 100% of my income is, they can tax it. Payments under the table stay there; that money is not part of your percentage. People receive payments and make payments without that money ever appearing on any bank accounts. This is unenforceable and doesn’t solve anything.
- zeveb 7y ago
  This comment here was what struck me immediately upon reading the story. Surely the Greek state has thought of that? Surely?
  - HeadsUpHigh 7y ago
    You have no idea how stupid they are
- Danieru 7y ago
  The point is the second order effects. You a may pay taxes, but the shops you spend your taxed income might be lieing on their taxes. Any electronic spending you made will not give the shops room to under report. In turn that shops electronic money forces the shops to force their employees to take taxed money, otherwise the shops could not claim the wages against the income.
teslaberry 7y ago
blame greek bankers and profiteers....and the enabling bankers and politicians in germany and france not greeke people. 16 billion is chump change and framing the debate to blame common folk is absurd.
tkyjonathan 7y ago
This is straight out of the book 'Atlas Shrugged'.
giarc 7y ago
I had a colleague who went on a Greek island cruise and told me a story of a common tax invasion scheme he heard about. I can't say whether this is true or not as he tends to tell "tall tales". He said he noticed a lot of residential properties with tiny churches on them. He said he learned that if Greeks had a church on their property it would be taxed at a much lower rate (or perhaps not at all) and therefore everyone had these tiny one person churches on their properties.
- mitsakos 7y ago
  No, that's not true. The reason that was done was because of a regulation that forced the electrical grid to treat church grid connection in an expedited manner. So one would built a house with a tiny church and would file papers for expedited connection to the grid. That was happening in places that were sparsely built and the cost of the grid to reach a house was great.
em-bee 7y ago
china found a better solution for this problem. businesses were required to use government issued software and receipt paper to print receipts. those receipts had a scratch area which would reveal a code that allowed the buyer to win something. that way the public was motivated to ask for that receipt, and because the receipt was printed with government software, the transaction could be reported directly.

90 points by ur-whale 7y ago

That's pretty messed up. What about the elderly and the poor? My grandmother (American) has never done one thing online in her life.

pedro2 7y ago
Credit cards counts as well. Probably cards in general.
- astura 7y ago
  Hell paper checks would probably count.
abracar 7y ago
It's not just for online transactions - it says "debit cards, credit cards, bank transfers and ecommerce".
mc32 7y ago
Syriza was right and Varoufakis should have called the ECB’s bluff but instead the ECB knew Greece was just pretending to call the bluff and just let them hang. They’d have been better off if they had executed Grexit than be saddled paying off German banks.
- coldtea 7y ago
  >They’d have been better off if they had executed Grexit than be saddled paying off German banks. Yeah, the scheme works like this: - Greek state was bankrupt - German banks and financial interests were over-exposed - Germany used EU and EU funds to "aid Greece". The funds are not used in Greece in any way, but to repaid the debt, so its basically EU -> Greece -> German banks. Germany benefits tremendously, Greece is merely kept on life support (still bankrupt, still with the same -and bigger debt as before the "aid", just with a credit line that goes straight to debtors, e.g. mostly exposed German banks), and Greek state is forced to sell assets for 1/10th the price for select German and other players (with political and economic pressure as to which those would be). - IMF piles on, pushing its own agenda (deregulation and other neoliberal/anti-welfare etc policies) So it's basically a swindle on the EU populations, to make them pay for German banks using Greece as an intermediary + a way to not let Greece default, but have it suffer a fate worse than default (mostly, selling everything to the lowest bidder and still being in the same piled-on debt). Well, that would be German elites. German people still paid like other Europeans for this scheme -- though the transaction also benefitted Germany economically, so somethings trickled.
  - hamilyon2 7y ago
    Well, not exactly. Debts of government were written-off about 50% https://en.m.wikipedia.org/wiki/Greek_government-debt_crisis https://en.m.wikipedia.org/wiki/Greek_government-debt_crisis As far as I know that means that creditors from northern Europe paid 50% of debts. This is organized default and a deal package that came with it. I wouldn't say German banks were exactly winners here.
    - bad_user 7y ago
      It's the same story in many countries ... populist governments increase public deficit via corruption and salary increases in the public sectors in order to secure votes for the next election, then get loans to pay said debt and then everybody blames the evil banks, FMI, EU, they blame anybody else but themselves for supporting corruption and populism.
    - Xelbair 7y ago
      get 50%, or lose 100%? which one you would prefer?
    - coldtea 7y ago
      >Debts of government were written-off about 50% That's a huge bargain for the banks compared to bankruptcy and its impact. And the Greek government (much less the people) still doesn't see that 50% write-off, since instead of defaulting and making a clean start with it, it's forced to take new lifeline loans, sell off assets at special ultra-low prices, and still repay everything. The current debt after a decade of "aid" is larger than the initial value - meanwhile their GPD has took an impact similar to that of war. For a private company or citizen, it would be the equivalent of not having the option to go bankrupt, but instead be sold to slavery.
  - disiplus 7y ago
    you are mostly right, there is a great book on this theme called "Crashed" "https://www.amazon.com/Crashed-Decade-Financial-Crises-Changed/dp/0670024937" https://www.amazon.com/Crashed-Decade-Financial-Crises-Chang... i't was the same story in most of the east europe. west banks where overexposed in the east europe, they pumped the "rising" markets in the east, and once the money stooped coming everything stopped. and now the west banks lobbied to give those local branches more modey so that they where not so exposed any more.
- YeGoblynQueenne 7y ago
  I'm sorry but I have to disagree. A Greek exit from the Eurozone would have meant an economic catastrophy incomparable to what we have to endure now. For one thing, we are currently not technically bankrupt. In case of Grexit, we would be well and truly bankrupt. If I remember correctly, Varoufaki's stratagem was to claim that we would be better off outside the EZ and back to our own currency (the drachma) which we could devalue unlike the Euro. However, the drachma was valued to €340.750, when we joined the EZ [1]. That would have meant that our debt of ~€355.49 billion [2] we would have to pay 12,113,321,750,000‬ drachmas. Note that we would supposedly try to pay off this debt by devaluing the drachma, which means, by printing more of it. That in turns mean that we would have to carry out our internal transactions with a devalued drachma. I don't know how to calculate the devaluation that would be needed, but I think the predictions that we would be back to the WWII situation where a loaf of bread cost a trillion drachmas, that many made at the time, were not too wide off the mark. _____________________ [1] https://www.euro-hellas.gr/isotimia-euro-drahmis.html https://www.euro-hellas.gr/isotimia-euro-drahmis.html [2] https://en.wikipedia.org/wiki/Greek_government-debt_crisis https://en.wikipedia.org/wiki/Greek_government-debt_crisis Converted to Euros based on current exchange rate of 1 Dollar to 0.9 Euro.
  - mc32 7y ago
    Well, the idea was that Greece would default on their loans (not that they’d pay back in Drachmas). If not at least pay back a severely discounted debt like Argentina and others have done. It’s too bad he kinda chickened out and didn’t call the ECBs bluff. I say kinda because I don’t think he ever intended to execute Grexit as he had threatened, but was rather using it as “leverage” but they saw right through that. Syriza should have made him do it.
    - YeGoblynQueenne 7y ago
      Yes, we could default on our loans. Then we would be free to borrow more at an eye-wateringly high rate, given that we would have no trust left with lenders. And we would have to service this debt with a drachma worth less than the paper it would be printed on. I don't see how anything good could come from turning our country into a financial pariah.
itismetheidiot 7y ago
all above 70 are exempted
smileysteve 7y ago
> What about the elderly and the poor? If it's on income, wouldn't this group always be approaching 100%?

mosselman 7y ago

It is sad to see how hard life is made for the average Greek due to the economic sanctions they were hit with to save malpracticing banks.

adaml_623 7y ago
Ha. Widespread tax evasion is not the fault of the banks. If there is a country where a huge proportion of people work in the grey and black markets then normal government tax policies don't work. If governments don't have income then they can't do the things that they need to do. If you've got a country then I think by definition you require taxation, borders, etc.
- inertiatic 7y ago
  Tax evasion isn't as widespread as you'd believe. Most people don't work in "grey or black markets" over here. Business do tax evade, most people can not and do not. There are ways to check on businesses and fine them appropriately without screwing your citizens. Unfortunately, that's not in the cards.
- yawboakye 7y ago
  I might be oversimplifying. Tax evasion becomes necessary when one knows they'd lose more money (than necessary) to taxes, especially when the benefits of the tax has not been or cannot be felt. If that's the situation, taxing becomes an exercise of government just because of nation and economic theories. The way to solve that isn't to surveil earnings and spending. It is to make a good case for why people should pay taxes. And usually, it involves spending the current tax money well.
  - bad_user 7y ago
    > "The way to solve that isn't to surveil earnings and spending. It is to make a good case for why people should pay taxes" What makes you say that? Has that ever worked? IMO taxpayers should pay their taxes simply because they are citizens and that's the law. If the taxes aren't bearable or just or aren't spent wisely, then they should vote accordingly at the next elections. Tax evasion does in fact reward the corruption that has led to tax evasion. And the way to end tax evasion IMO is to (1) decrease taxes, as to make the burden bearable for everybody, but then (2) put tax evaders in jail, show no mercy.

hvenev 7y ago

I feel like this will only lead to more people not declaring their income.

yawboakye 7y ago
Ironically, the move is supposed to deter people from doing that. The article doesn't go into details about how it will be achieved. It'd be nice to see how the Greek public reacts.
lotsofpulp 7y ago
That can also be incentivized to go electronic.
puPoh 7y ago
Spot on. A lot of people have unregistered jobs. This kind of laws encourage a hard split between clear and shadow economy.

itismetheidiot 7y ago

The parliamentary financial evaluation committee has already declared it as unconstitutional. For those that still manage to save some of their income – a luxury for very few nowadays – the plans to tackle this were already though out. For example, a large purchase of a high end tv at the last day of the year, which then would be returned a couple days unopened. The ministry would be “happy” and your savings would not really have exchanged hands permanently. It mostly illustrates the inability of the government to be effective.

postingFourFast 7y ago
> It mostly illustrates the inability of the government to be effective. Be careful, the Financial Panopticon lobby is getting better at this at an exponential rate. Just look at how they reacted to cryptocurrencies. > a large purchase of a high end tv at the last day of the year, which then would be returned a couple days unopened. If the purchase is electronically receipted the return will be as well. All they have to do is change the wording from "purchases" to "net purchases". Or just issue a regulatory interpretation indicating that's what the legislators meant in the first place.
icebraining 7y ago
But was the goal to actually force people to spend money? Not just force it to be tracked electronically?

pleasecalllater 7y ago

I hope it's a joke, or something is missing there. I try to save as much as possible and I barely spend 25% of my income. Forcing me to spend more is not right. Maybe they were rather thinking about: move your money electronically, which would also include getting salary on a bank account, or wiring it there.

docdeek 7y ago
If I understand it, the point is to avoid cash transactions that cannot be taxed. One article I read pointed out that the 30% would include rent or mortgage payments, utility bills, and such things. Personally, I would find it easy to hit almost 100% of the transactions I make electronically - I use cash rarely now (living in France, no cash tips etc.). I think I would struggle to only spend 25% of my income, though. Even if I am saving a lot, once I pay rent, family groceries, utilities, phone and internet, I’d be past that. If you don’t mind to share, how do you manage to spend so little of your income? There’s always room for me to save more, and I’d love a couple of tips.
- vinni2 7y ago
  He is probably well paid. I agree it’s hard to keep the expenses below 25% of income.
- taneq 7y ago
  I'm guessing single person willing to live frugally, working in high paid tech job. That, or using different definitions and not literally saving 75% of take-home pay.
- esotericn 7y ago
  It's trivial. You just need to earn 4 times your minimum spend and then do it. ;)
- andmarios 7y ago
  Allow me to explain better. The 30% comes before any tax. Also it does not include payments for taxes, rent and other things. So, let's say I make €40K/year. My tax will be about €11K. Further taxes, such as owning some property, owning a car, can add €1-3K more. My rent may be €7K. So now, I have already spent ~€20K but this does not count towards this limit. I still have to spent €12K on various things (food, services, goods, which come with 24% VAT in Greece) or I get an additional 22% tax. It's madness!

yawboakye 7y ago

Seen another way, companies will have to provide electronic payment options. Hopefully there's follow up incentives to make electronic payments appealing. Credit card cash back isn't still a thing in EU (or at least Germany). That said, I don't know which is generally safer, cash or card, but in my own experience I feel more secure traveling/walking around with my bank card that cash. It's 2019 and there's still several places in Germany where you have to pay > 50eur bills in cash.

YeGoblynQueenne 7y ago
>> Seen another way, companies will have to provide electronic payment options. This is already the case in Greece. Even "periptera" (equivalent to drug stores in the US or corner shops in the UK) have to accept card payments and issue receipts, which was unheard of a few years ago. This was explicitly imposed to curb VAT tax evasion I believe. It was a measure insituted by the previous government, of Syriza.
IMTDb 7y ago
> Credit card cash back isn't still a thing in EU (or at least Germany) They will never be a thing in EU, under the current regulations. Cash back work because in the US credit cards charge very high transaction fees. IE: every time you make a payment, a portion of it goes to the credit card company. The The credit card company then gives some of that back to you (hence the name) to push you to use their cards instead of the competitors. By law, the transaction fees in Europe are really low, so the credit cards company have nothing to give back to you. Credit card is also a far less profitable business in Europe than it is in the US, that is why you see far less ads for credit cards offers.

YeGoblynQueenne 7y ago

>> Tax evasion has been labelled a "Greek national sport" and it was estimated in 2016 to cost the country's coffers up to €16 billion every year, largely through fraud on VAT or income tax. Although I've made this joke myself in the past, about tax evasion being our national sport, it's insulting to see it repeated by an Australian publisher. Personally, I've only had to pay taxes abroad, in the UK, where there was no opportunity to evade them (because they were directly deducted from my salary - I'm a PhD student now hence the past tense). I wouldn't really say I'm an expert tax evader. That said, any discussion of taxation and tax avoidance in Greece as well as the rest of South-Eastern Europe must also take into account the sorry state of public services, which tax money is meant to support. It's a chicken-and-egg problem, but it's easy to see why nobody would want to be the malakas who pays their taxes properly only for their tax money to disappear down the black hole of corruption before having any chance to improve the national health service, education, our roads, etc etc. Taxation makes sense when it's spent to improve and maintain the commons - not to line politicians' pockets. Of course, that's not absolving my fellow Greeks of responsibility. Corruption is high in Greece because we support corrupt politicians with our votes, and because we have done so for three generations since the "metapolitefsis", the change to democracy after the years of the military dictatorship (ended in 1974). To wit, Kyriakos Mitsotakis (the current prime minister, pictured in the article) is the second Mitsotakis to be prime minister, grandson of the first - and his mom is also an MP. And before him we had Papandreou I (in the '50s), II and III and also Karamanlis I and II to rule us (and all their friends and cousins as MPs). We keep voting the same "houses" in power and then complain that they suck us dry and destroy the economy. And then of course it's every man and woman for themselves. It's a fucked up situation and we are very much guilty for our choices over the years. But silly jokes about national sports don't help to get to the heart of the issue, or convey its seriousness.

zorked 7y ago
Not saying it's right but Canada had Trudeau I and II, the US had Bush I and II, and the Clinton and Kennedy families, so it's not like political dynasties aren't common in many countries.
- 7y ago

ukoki 7y ago

Surely there are better ways to achieve this. Off the top of my head: * Force business to accept electronic payments. * Reduce the number of ATMs * Limit ATMs to lower denomination notes * Increase VAT for cash payments

tonyedgecombe 7y ago
Only allow businesses to offset tax against non cash expenses. You need something that will ripple through the system and encourage good behaviour.
jbverschoor 7y ago
- Improve mobile network - Force limits on transaction fees - Force banks to protect consumers with phishing, fraud and other scams - Lower taxes, and they will now be collected
chrisseaton 7y ago
> Increase VAT for cash payments People don't pay VAT on cash-in-hand payments, though do they?
- tomcooks 7y ago
  In most EU countries they do, it's included in the final price. To find out whether the VAT money goes to the state as VAT or gets "forgotten" in the merchant's pockets is left to the student as extracurricular work.
  - chrisseaton 7y ago
    Have you seriously never had anyone offer you a 'discount' for a cash payment? Why do you think they're doing that?
    - icebraining 7y ago
      I live in a southern EU country, and that's very rare here, in my experience. The only cases I can think of in the last decade were home repair people. Even car mechanics stopped doing that.

Nasrudith 7y ago

That sounds like an ugly hack and I suspect that tax evasion reporter bounties would probably work better but I don't know their system and problems in details beyond "rampant tax evasion and loopholes in an economy that isn't as advanced as it should be". I had a related thought while having breakfast. A hypothetical transparent economy where everyone had open ledgers of transactions and how utopian or dystopian it would wind up. Money laundering still be possible in that system - any uncertain value fudged up or down in exchange for illicit hidden transactions would work for that practice.

dsfyu404ed 7y ago
>That sounds like an ugly hack and I suspect that tax evasion reporter bounties would probably work better Giving people an monetary incentive to rat on each other for something a large slice of the population engages in (to varying extents) almost always increases distrust and dysfunction in society. You can sometimes get away with it in some places where trust of government is very high and allegiance to local community is very low but Greece is not one of those places. Right now one of Greece's problems is too little trust in government (part of why people feel justified dodging taxes). Incentives like you described would be counterproductive.
- Nasrudith 7y ago
  Hmm interesting perspective - I would have thought disrupting the "conspiratorial cohesion" as well as turning the greed of enterprises against them. Not what I would have thought.

ur-whale 7y ago

I am afraid that - while this is extreme - this is pretty much a taste of things to come for many industrialized countries. Cash is well on its way to being outlawed in many places, thereby giving states historically unparalleled control over their flock. Complete and detailed financial transactions are pretty much the least noisy dataset you can imagine to build a person's detailed profile.

defertoreptar 7y ago

Sounds like a case for swapping to land value tax if I've ever seen one. Can't hide land.

mikro2nd 7y ago
You can't hide land, but how do you determine 'value'? We have some such system for funding local government, and the values are, in general, an absurd fiction (in both directions) despite the legal theory that property values should be based on some notion of 'market value'. One trouble is that when the property market declines, local governments don't take that into consideration, and refuse to reduce property valuations, because that would impact their revenue stream in the direction they dislike.
- defertoreptar 7y ago
  If you ask me, if this was to be done, s the following steps should be taken. 1) The government should commission an expert panel to investigate a system for assessing land value (or perhaps even crowd source it). A set of descriptors (size, location, if it's next to a sewer treatment plant, etc.) should be determined. Along with sale price records, a system should be designed to predict land values. B) Every part of the system should be public information, including the set of descriptors, so that individuals can dispute them and have them updated in the records. C) Per law, the system should be regularly reviewed and updated, so that it is as accurate as possible.
  - mitsakos 7y ago
    All of these have happened, in some degree at least. And yet it's still a mess. e.g. 1) That panel exists in a variety of forms. The problem is, how do you nicely estimate land value in an economy were real estate transactions are few (which is happening for the last 10-12 years or so)? In many places it's impossible to estimate due to the above, so the alternative is to rely on very old values which are going to be out of date and don't reflect reality. And you can't put 0 for the land value as that would mean 0 taxes and the state financial situation does not allow that B) That is happening. Dispute is problematic as it takes years for the courts (yes, with the exception of blaring mistakes, the state has no incentive to accept that a land value estimation is wrong, so courts it is) to come up with a decision (never mind the fact that it will be appealed anyway so even more time and money spent on this), but it is happening. C) Again, this is problematic due to the same reason as 1). There aren't really that many real estate transactions to accurately estimate land values. Everything went into a pause for years in a row.

why-oh-why 7y ago

Excuse me, what? If they know what 100% of my income is, they can tax it. Payments under the table stay there; that money is not part of your percentage. People receive payments and make payments without that money ever appearing on any bank accounts. This is unenforceable and doesn’t solve anything.

zeveb 7y ago
This comment here was what struck me immediately upon reading the story. Surely the Greek state has thought of that? Surely?
- HeadsUpHigh 7y ago
  You have no idea how stupid they are
Danieru 7y ago
The point is the second order effects. You a may pay taxes, but the shops you spend your taxed income might be lieing on their taxes. Any electronic spending you made will not give the shops room to under report. In turn that shops electronic money forces the shops to force their employees to take taxed money, otherwise the shops could not claim the wages against the income.

teslaberry 7y ago

blame greek bankers and profiteers....and the enabling bankers and politicians in germany and france not greeke people. 16 billion is chump change and framing the debate to blame common folk is absurd.

tkyjonathan 7y ago

This is straight out of the book 'Atlas Shrugged'.

giarc 7y ago

I had a colleague who went on a Greek island cruise and told me a story of a common tax invasion scheme he heard about. I can't say whether this is true or not as he tends to tell "tall tales". He said he noticed a lot of residential properties with tiny churches on them. He said he learned that if Greeks had a church on their property it would be taxed at a much lower rate (or perhaps not at all) and therefore everyone had these tiny one person churches on their properties.

mitsakos 7y ago
No, that's not true. The reason that was done was because of a regulation that forced the electrical grid to treat church grid connection in an expedited manner. So one would built a house with a tiny church and would file papers for expedited connection to the grid. That was happening in places that were sparsely built and the cost of the grid to reach a house was great.

em-bee 7y ago

china found a better solution for this problem. businesses were required to use government issued software and receipt paper to print receipts. those receipts had a scratch area which would reveal a code that allowed the buyer to win something. that way the public was motivated to ask for that receipt, and because the receipt was printed with government software, the transaction could be reported directly.