
Greeks set to face fines if they don't spend 30% of their income electronically - ur-whale
https://www.smh.com.au/business/markets/greeks-set-to-face-heavy-fines-if-they-don-t-spend-30-per-cent-of-their-income-electronically-20191209-p53i14.html
======
YeGoblynQueenne
>> 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.

~~~
geomark
Maybe you can verify this story that I was told. On a few vacations to Greece
I wondered why so many buildings of all shapes and sizes had some re-bar
sticking out somewhere, usually at the top of a post. I was told that it is
about evading property taxes by never completely finishing construction, that
taxes were not due on unfinished buildings. So they were never finished. The
buildings were all occupied and fully livable but I guess the owner could
point to the re-bar sticking out and say it was not really finished.

~~~
saiya-jin
This is exactly what I heard about Bolivia, more specifically La Paz. The city
looks like 80% of the buildings were started 1 year ago and waiting for
another storey to be completed, and put paint on it. But no, you see these
unfinished buildings, with just raw concrete and bricks, and people happily
living there.

It might have caught law makers by surprise initially (not really buying
that), but its so damning visible even to outsiders, it just highlights the
rampant corruption and lack of actual care from politicians there.

~~~
thu2111
I heard this when I was in Egypt too. Seems to be a common problem.

------
itismetheidiot
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.

~~~
icebraining
But was the goal to actually force people to spend money? Not just force it to
be tracked electronically?

------
pleasecalllater
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
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.

~~~
andmarios
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!

~~~
mnw21cam
The article says that payments for rent do count towards the limit. Can you
re-confirm?

~~~
andmarios
I can. Rent does not count towards spending but it counts towards... earning.

So, if you own a house and rent it to others, the rent is part of your income.
If you rent a house to leave in, the rent is not part of your spent amount.

There is a special clause, that if you spent more than 60% towards tax, rent
and loan payments, then you only have to spent 20% of your income on services,
goods, etc.

------
why-oh-why
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
This comment here was what struck me immediately upon reading the story.
Surely the Greek state has thought of that? Surely?

~~~
HeadsUpHigh
You have no idea how stupid they are

------
ur-whale
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.

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

~~~
yawboakye
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.

------
chadlavi
That's pretty messed up. What about the elderly and the poor?

My grandmother (American) has never done one thing online in her life.

~~~
mc32
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
> _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
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
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.

------
mosselman
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
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.

~~~
yawboakye
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
> " _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.

~~~
yawboakye
> 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

Let's assume that this is the reason for tax obligations. What will be the
equivalent statement made for the government? Government should collect taxes
from citizens because it's the law to collect taxes from citizens?

Tax collection isn't a sport. It's toward national development. If one end
happens (tax collection) but the other doesn't (national development), expect
rational beings to change attitude towards the first.

~~~
imtringued
Are you seriously saying draconian taxes are acceptable because you can decide
not to pay them? This isn't how a democratic government is supposed to work.
That's just pure anarchy and probably points to why Greece came into this
situation in the first place. Citizens do not face the consequences of the
government they elected and therefore they have no incentive to actually vote
for politicians that want to solve the problem. Instead everyone is trying to
break the rules in every way possible and then once a rare and naive guy gets
into government and wants to suggest a real solution your little raft made out
of discarded PVC pipes that you have carefully built over the course of your
life isn't good enough anymore. Being forced to upgrade to a kayak is going to
be painful but it will be worth it in the long run.

------
Nasrudith
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
>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
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.

------
yawboakye
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.

~~~
IMTDb
> 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.

------
giarc
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
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
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.

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

~~~
mikro2nd
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
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
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.

------
ukoki
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

~~~
chrisseaton
> Increase VAT for cash payments

People don't pay VAT on cash-in-hand payments, though do they?

~~~
tomcooks
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
Have you seriously never had anyone offer you a 'discount' for a cash payment?
Why do you think they're doing that?

~~~
icebraining
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.

~~~
chrisseaton
This article is about how evading tax is _not_ very rare in places like
Greece.

