[MGSA-L] How Greek Taxpayers Hide 11 Billion Euros a Year
june.samaras at gmail.com
Sun Sep 2 21:09:13 PDT 2012
September 1, 2012, 7:00 AMComment
How Greek Taxpayers Hide 11 Billion Euros a Year
By DAN KEDMEY
After a brief summer holiday, the euro crisis is back. Adam Davidson’s
latest column previews seven dramas coming to the Euro zone this fall.
As usual, things begin with Greece, which has to cut its budget by an
additional 11.5 billion euros in order to secure the next round of
debt relief. In a surprising twist, that may be the exact amount of
money that Greece loses from tax evaders each year.
Margarita Tsoutsoura, a finance professor at University of Chicago,
says tax evasion is an open secret in her home country. “You encounter
it in everyday life,” she says. “When you go to a restaurant, they
will not give you receipts. When you go to the doctor, they will not
give receipts.” Tsoutsoura wanted to know just how much money was
tucked away in this paperless economy. But how could she tally up
secret stashes of cash, short of peeking under people’s mattresses? It
turns out the Greek banks had already taken a peek for her.
Banks have an incentive to estimate the “true” incomes of their
clients, so that they know how much money to lend them. Over the
years, banks have created estimates of true incomes by gathering data
on occupations, salaries and loan histories. One of Greece’s largest
banks shared this wealth of data with Tsoutsoura and her research
colleagues. A result is a new study that provides startling insights
into the culture of tax evasion.
For starters, the average self-employed worker in Greece makes almost
twice as much money as he or she reports on tax forms. And among the
self-employed, those who are doctors, lawyers or other highly paid
professionals with scant paper trails — due to the fact that they
provide a service and don’t have a detailed inventory of inputs — tend
to be the most agile tax evaders. The total loss to the government is
more than $11 billion euros a year, enough to resolve Greece’s
immediate budget crisis.
So why hasn’t the government cracked down on tax evasion? It could
have something to do with a recent riot on Hydra, where more than 200
people attacked the police for arresting a local tax evader. As one
local hotel owner put it, both sides overreacted to “the common
incident of tax evasion.”
Tsoutsoura says, “It will take some time for this culture to change.”
Time, unfortunately, is a luxury Greece does not have, as its
creditors demand immediate and far-reaching austerity measures. e.
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