Taxes – Letters from Athens

Broiling and filthy

While we are awaiting a major heatwave in Greece, we are surrounded by piles of rubbish, since garbage collectors have decided to go on strike. In fact, they have been on strike for some time and, following days of protests, rallies, occupation of public car parks and camping outside city halls, yesterday they voted to carry on, unhappy with the terms of their employment. The government, as usual, is dithering, wavering between the country’s needs and the demands from the Troika, while every decision taken is delayed by the usual bureaucratic tape.

As neighborhoods are being asphyxiated by piles of bin bags, some cities – such as Thessaloniki, which boasts a very active mayor – are looking to hire private firms to do the job, something which is not looked upon kindly by the syndicates. The impact on tourism is incalculable.

A street in the town of Tripoli (source: Google)

Meanwhile, citizens already suffering from heatstroke and inhalation of toxic fumes are to be dealt another major blow: taxes for employees, farmers, pensioners and the self-employed are due another whopping rise, since they will now be calculated in a different, ‘new’ way. Speaking of which, the government has taken to inventing creatively named ways of fleecing the population – such as the ‘claw-back’ and the ‘solidarity tax’. I leave it to your imagination to make out their meaning.

This is the result of demands for more and more money from our lenders, which will go to paying back what we owe. But the well is running dry, and the economy, instead of being revived, is being driven underground. I know a lot of people who already use barter – the dentist putting fillings in the plumber’s teeth in return for having the shower fixed, and so on. Back to basics, I suppose…

Not much to be thankful for?

In Greece we do not celebrate Thanksgiving, but we’re still aware of it through foreign relations and friends. Many have been asking me if things are getting better, since Greece seems to be a lot less in the international news lately. Unfortunately, I have to report that the answer is no.

We cannot be thankful that we are saddled with an inexperienced and inefficient government. And we cannot be thankful for our ‘lenders’, whose handling of things has been a disaster. Negotiations have been going on over the summer regarding The Debt. Result: more and more taxes are to be imposed. To my mind, this only makes sense if the aim of the exercise is to make sure Greece sinks. I’m sure a lot of people would be interested in buying national and private assets dirt cheap, something which has already been going on. Airports and ports, anyone? A house on a lovely island? The list goes on.

We can't turn back now! (after all this effort...) — We can’t turn back now! (after all this effort…)

Various eminent economists from different countries have been at pains to explain what needs to be done for Greece to regenerate its economy, but their words are falling on deaf ears. It would seem self-evident: if you want to help the country out of this crisis, give incentives to investment, help small businesses, start new projects. Curb corruption and cut the public sector. Maybe this sounds simplistic as a theory, but what is happening now is a dead end. The government, coerced by the lenders to produce more money is basically robbing people who have no more to give. I say robbing, because those who are owed money by the government are lucky if they see half of it, after great delay. And yet they are fined if they don’t pay the whole of their taxes on time. More and more are being forced into the black economy (on the advice of their accountants, no less), paying with cash or even using barter (You fix my plumbing and I’ll fix your back…)

At the same time, the country has been obliged to face a terrible humanitarian crisis, which is being mismanaged to an appalling extent. People are herded like cattle into inadequate facilities, where, due to despair, loss of hope and lack of employment they are turning against each other. Fires are set, people are injured. These violent incidents will only result in turning opinion against them. I’m not saying that all refugees, or migrants, call them what you will, are the same. But I have taken the trouble to read some stories of these people’s journeys and misfortunes, of the situations they have been forced to flee, and I am horrified by what is happening.

As a nation, we still have a lot to be thankful for. Our climate, our beautiful countryside, our heritage, and most of all, our people who, as a whole, are managing to deal with their misfortunes and remain optimistic. But it will take more than optimism to get the country out of the mess it’s in.

A hailstorm of taxes

We had a deluge yesterday – unusual for this time of year, but extremely providential, as it helped control a huge forest fire. These are the bane of Greek summers, so the water, in spite of causing some damage, was appreciated. At the same time – much less appreciated – we have a deluge of taxes pouring down on us: new taxes, as well as increases in old ones. More are expected (threatened?) in September.

There is a saying ‘Ουκ αν λάβοις παρά του μη έχοντος’ (you can’t take from him who does not have) – a little like ‘You cannot get blood from a stone’. It’s a mythological reference to Charon, who was the ferryman in Hades, carrying the souls of the deceased from one bank of the river Styx to the other. His fee was one obolus, and a coin was placed under the tongues of the dead, so that they would be able to pay him. But I digress. My point is that people are at the end of their tether – they have no more money.

Fact: 20,000 businesses will close in the next six months – we are quite a small economy, and that is on top of the many thousands that have already closed since the crisis started. How come the eggheads in Brussels don’t understand that if they don’t restart the economy they’ll never get their money back? Our government doesn’t seem to get it, either.

Fact: A lot of taxpayers are getting advice from their accountants to close their books or else they’ll be forced to close up shop. This is especially true in the case of professionals and freelancers like physiotherapists, masseurs, dog trainers, hairdressers, small shop owners and the like. Many are being forced into the ‘black economy’.

Fact: the new laws that are meant to alleviate matters for the less well-off result in the following logistics:
Someone whose income is €30.000 but declares €10.000, receives child support and the right to send one child to daycare for free. His disposable income after tax is €26.657,9.
Someone whose income is €30.000 and declares €30.000, receives no child support and has to pay for daycare. His disposable income after tax is €13.543,4 i.e. half of the evader’s.

Fact: in spite of the increase in taxation, the total of taxes collected keeps decreasing. Does this have anything at all to do with the above?(duh…)

Those who, for reasons of honesty or because they can’t do otherwise, pay their taxes, end up also paying for the rest. At the same time, the state is happily robbing a good part of the population, by not paying what it owes them while refusing to offset what they owe with what they are owed.

Fact: A lot of Greeks cannot afford to go on holiday once again this year, as seen by hotel bookings. So it is left to foreign tourists to enjoy the island life…

PS. I made a cheerful drawing, since my subject matter is so depressing…

Not everyone wants to cheat on their taxes

Irini* is an esthetician. She lost her job at an upmarket salon when it closed down abruptly. The owner, a shady entrepreneur with fingers in a lot of pies, had declared bankruptcy and was subsequently arrested for tax evasion. That was three years ago, and she is still owed a few months salary. Irini found another job immediately, but only part-time. She supplements her meager salary by offering facials at home. She gets paid in cash. She would dearly love to start a little business with a friend, but has yet to find a way to make it affordable.

Roula* is a masseuse, earning good money making house calls (as much as €1,000/week, on good weeks.) She has tried many times to start a proper business, because she wants to be able to declare a steady income so that she can ask for a bank loan in order to buy an apartment. This is unaffordable with the present laws, since she would need to invest a large sum to set up her own space. A sum she does not have. She is a single mother with a son to support, so she has been forced to take a part-time job where she is paid a lot less per hour, just so that she can qualify for some social security.

Myrna* opened a tiny cake shop in an affluent Athens suburb, investing a lot of her own money. Three years later, and although she has acquired a loyal clientèle and as much work as she can manage, if not more, she is still not making a profit. And yet she has to pay a lot of taxes. She might have to close down.

If people like these were given incentives in starting and running small businesses, they could each pay a few thousand in taxes yearly. One million people times one thousand in tax a year? Do the math. The state would get a cool billion, where now it gets nothing. In France, for example, if you have a ‘micro-enterprise’ declaring up to €23,000, you pay around €5,000 in tax. Again, do the math.
There are A LOT of such people in Greece. Proper laws would help with tax evasion, and with unemployment. Instead, thousands of small companies have been forced out of business, and the black economy is thriving. The capital controls, which – despite promises – are still enforced, are not helping the situation.

And another thing, it’s not very easy to make a budget when the laws change every two minutes, and some taxes are applied retroactively.

In another surreal twist, Manolis*, who is a farrier, was preparing his tax declaration form, when he was astonished to discover that the profession of farrier had been struck off the list! Unable to decide how to fill in the form, he went to the tax office where a harassed employee had no idea what he was talking about. He asked to see the person in charge, and was directed to an office where a man lounged behind a desk, drinking coffee.
‘Well, just put the profession closest to yours,’ the man told him, totally uninterested.
‘I shoe horses! So, what shall I put? Cobbler? Ironmonger?’ Manolis was both sarcastic and indignant.
The man looked at him.
‘Did we summon you here?’ he asked.
‘No. I came because I need to know what to do with my tax form.’
‘Oh, for god’s sake, man, what’s your problem? Just put what you like, don’t waste my time.’

Anestis* is a physiotherapist. A lot of his patients are covered by social security, which means they don’t pay him directly – he subsequently gets paid by the state. However, a law came out reducing the price of each treatment retroactively from €15 to €12 (effective since 2012.) In May, he was paid for 2014 – but, of €45,000 he was owed, he only got €15,000. He still has not received the rest, and has no idea when and if he will get any of it. He seems resigned to the fact that it will certainly not be the whole amount. Meanwhile, he’s had to pay €30,000 in taxes – the tax people having refused to offset his credit against his debt.

Now for the flip side of the coin. Something Greeks seem unable to understand is that ‘the State’ is not an abstract entity that gets its money from a higher deity. Cheating the government is cheating your family and neighbors, those who do pay. But people still admire a friend or colleague who’s found a clever way of getting around some taxes, refusing to understand that it’s their own taxes that will pay for the shortfall.

Nobody likes paying taxes. But paying taxes is more painful if you feel the government is robbing you, or if you feel you’re not getting anything in return (roads, schools, etc.). A change in mentality is desperately needed – on both sides.

* All names have been changed