[REBORN FROM THE ASHES][comment][02.12]

irvine666UID: 2575525

Greek finances

The labours of Hercules

First task: persuade the middle classes to be honest about their taxes
Feb 11th 2010 | ATHENS | From The Economist print edition

UP AND down Greece, public-sector workers, from teachers to rubbish-collectors, left their jobs on February 10th. They braved the persistent rain to chant slogans against a pay cut for civil servants, the first anyone can remember. It means that chief executives at state corporations could have their real salaries cut in half, and even cleaners and drivers will see their earnings slip by 4%. That is the net result of a freeze in basic pay combined with a slashing of allowances.

For all its sound and fury, the protest was a relatively tame affair, organised by unions who are close to the ruling Socialists but feel obliged to let off steam. The exception was a protest by farmers, whose tractors have been blocking many Greek highways, and the main border crossing with Greece’s EU neighbour Bulgaria, for the past three weeks. But by mid-week even these were trundling home.

By some other indicators, domestic as well as external, this ought to be just the right moment for the Socialists to win acceptance for tough measures to raise taxes and curb spending. On the basis of polls, George Papandreou’s team is confident that at least two-thirds of voters will back moves to stem tax evasion, waste and graft. The conservative opposition, in a mood of deep introversion after being turfed out last October, can hardly challenge the handling of a crisis it helped to create. Its leader, Antonis Samaras, has been pointedly thanked by the European Commission president, José Manuel Barroso, for his constructive attitude.

But the risk now is that the consensus for reform will ebb away. The pay cuts will undoubtedly draw blood, and people must brace themselves for an imminent reform of the pension system, which is likely to raise the average retirement age from 58 to 63. A mass exodus of elderly civil servants is expected in the run-up to the new regime. That will reduce the head-count, but will hardly bring needed improvements in productivity and efficiency.
In a bid to offset the political cost of the wage cuts, and also to pre-empt demands from impatient EU partners, the government has announced a sweeping overhaul of the tax system, including a drive to collect more revenue from the rich. The upper tax rate of 40% will start at 60,000 ($82,000), down from 75,000, and there will be tough penalties for evaders; shops may be closed and assets seized. Big property holdings, including some church assets, will incur a progressive levy. However, implementing tax reforms will be an uphill struggle as long as corruption abounds among collectors.

The first challenge is to induce citizens to show a modicum of honesty in declaring what they earn. Over 95% of individual tax returns are below 30,000, and only a few thousand citizens admit to receiving more than 100,000. To see how little this corresponds to middle-class Greek reality, you need only visit one of the flourishing and over-subscribed private schools in greater Athens. There, in return for handsome fees, pupils are groomed for elite colleges in Europe and America.

The authorities already feel mildly encouraged by a scramble to collect receipts, triggered by a new rule that a tax break on the first 12,000 of income can be collected only if documentary evidence is shown. Cynics predict a brisk secondary market in receipts, especially towards the end of the tax year; but the sight of citizens rushing to bring small transactions into the taxed economy is a new one.

Yannis Palaiologos, a young Greek writer, is encouraged by the warm response to his new play which satirises corruption: it describes a scheme by an unscrupulous government to sell the Acropolis to businessmen who prove to be priests. His conclusion? “People know the system is broken. I think there is a willingness to endure tough measures, on condition that moves are made against the people who profit most, such as rich doctors who pay no taxes or civil servants who take bribes to award contracts.”

Still, there is a question over how long that willingness will endure as Greeks count the cost of recession. Banks have squeezed lending to consumers and small firms. The number of bounced cheques has reached record levels. In such a climate, the mood of nervous anxiety could give way to seething resentment.

Among Greek politicians and commentators, there is plenty of talk of an international conspiracy to discredit the euro, Greece, or both. Aides to Mr Papandreou insist he is not fuelling conspiracy theories, despite efforts by interviewers to bounce him into conspiratorial statements.

He is walking a tightrope. In a country that saw Europe’s worst riots of recent times just over a year ago, social peace is fragile. But the biggest threats come from fringe groups, such as ultra-leftists and disaffected youths, not from the mainstream unions or parties.

prettywraithUID: 197049

Comments (2010-02-12):
This is an essay related with Greek fiscal and political crisis, which can be treated as an example for ISSUE170 something about welfare. Confused with some obscure words, I spend one hour to read this passage.

Recently, Greek fiscal crisis almost becomes the hottest topic in media. As the origin of western civilization, each year, Greece attracts many visitors. Every time people talk about Olympic Games, they all will mention about Greece. Moreover, in my eyes, most of European countries are wealthier than China. At least, their citizens are happier than Chinese. After reading this passage, I found I only guess rightly in half. Though Greece is counted as a developed country, it still has the serous bribe problems. Corruption in civil servants leads to that more people evade the tax by taking bribes. Thus government hardly collects enough money through tax, while it has a heavy welfare burden. Thus, suffering from heavy fiscal deficits for a long time, under the pressure from European Union partners and worst riots, Greece has to deal with its fiscal problems. From author's perspective, Greece seems not to overcome this crisis only by its own efforts. Certainly, the quality of Greek life is better than Chinese.

Wrong Spelling：
waste  wates
visitor  vistor
Olympic  Olymplics
develop  develp
perspective  perpective
servant   servent