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The main problem is the small taxable base, meaning tax evasion in Greece is a serious problem. By increasing VAT you make sure that you actually increase tax

The main problem is the small taxable base, meaning tax evasion in Greece is a serious problem. By increasing VAT you make sure that you actually increase tax revenue quick and in a uniform way across the entire population. It makes your budgeting and forecasting more predictable and reliable. Yes, it affects the poor the hardest, but at least you can actually budget an increase in aid programs. If it were to hope on plans to increase tax collection efforts it would then become a very unpredictable and lengthy setup. Plus, there are already Eastern European countries (see Romania, a country in the proximity of Greece) that applied the VAT increase measure starting with 2010 when it went up to 25% VAT. At the time, Romanian State workers had to also accept a pay cut of 30% of their salary. What I mean to say is that the austerity plan Greece is embarking on right now has been tried already and it will work. The problem is the political will of the Greek elite to give up their privileges.

wozniacki 11y ago
There is nothing to suggest even affluent Greeks have ever wanted to pay their share of the tax burden. From a Der Spiegel article, five years ago: His staff have become very creative when it comes to tracking down tax offenders: They use police helicopters to fly over Athens' affluent suburbs and make films of homes owned by doctors, lawyers and businesspeople. They use satellite pictures by Google Earth to locate country villas, swimming pools and properties. And these tactics have revealed that the suburbs didn't have 324 swimming pools, as was reported, but rather 16,974. Tax fraud investigators spent a number of weeks on nightclub parking lots in Athens and noted down the registration numbers of luxury sedans. Their investigation revealed that approximately 6,000 car owners have vehicles worth €100,000, but only reported to the tax authorities that they have an annual income of €10,000.[1] [1] Finding Swimming Pools with Google Earth: Greek Government Hauls in Billions in Back Taxes http://www.spiegel.de/international/europe/finding-swimming-pools-with-google-earth-greek-government-hauls-in-billions-in-back-taxes-a-709703.html http://www.spiegel.de/international/europe/finding-swimming-...
- mnglkhn2 11y ago
  There is a tax provision where if your house is unfinished (by way of not having the house painted or the exterior fully done) then you are tax exempt on the house. Until the house is completed, which might be never.
visarga 11y ago
> there are already Eastern European countries (see Romania, a country in the proximity of Greece) that applied the VAT increase measure starting with 2010 when it went up to 25% VAT. At the time, Romanian State workers had to also accept a pay cut of 30% of their salary Relevant: Romania does not use the Euro, so it can run its own monetary policy.

wozniacki 11y ago

There is nothing to suggest even affluent Greeks have ever wanted to pay their share of the tax burden. From a Der Spiegel article, five years ago: His staff have become very creative when it comes to tracking down tax offenders: They use police helicopters to fly over Athens' affluent suburbs and make films of homes owned by doctors, lawyers and businesspeople. They use satellite pictures by Google Earth to locate country villas, swimming pools and properties. And these tactics have revealed that the suburbs didn't have 324 swimming pools, as was reported, but rather 16,974. Tax fraud investigators spent a number of weeks on nightclub parking lots in Athens and noted down the registration numbers of luxury sedans. Their investigation revealed that approximately 6,000 car owners have vehicles worth €100,000, but only reported to the tax authorities that they have an annual income of €10,000.[1] [1] Finding Swimming Pools with Google Earth: Greek Government Hauls in Billions in Back Taxes http://www.spiegel.de/international/europe/finding-swimming-pools-with-google-earth-greek-government-hauls-in-billions-in-back-taxes-a-709703.html http://www.spiegel.de/international/europe/finding-swimming-...

mnglkhn2 11y ago
There is a tax provision where if your house is unfinished (by way of not having the house painted or the exterior fully done) then you are tax exempt on the house. Until the house is completed, which might be never.

visarga 11y ago

> there are already Eastern European countries (see Romania, a country in the proximity of Greece) that applied the VAT increase measure starting with 2010 when it went up to 25% VAT. At the time, Romanian State workers had to also accept a pay cut of 30% of their salary Relevant: Romania does not use the Euro, so it can run its own monetary policy.