Thursday, February 14, 2013

The Greek debacle 2013: Of paupers and taxes

Via the Guardian: "Athenians reach out for a bag of oranges during a free distribution of fruit and vegetables by farmers outside the Agriculture Ministry. The farmers are staging the event to protest against high production costs, including rising fuel prices"
It used to be the case that I would need some time and effort to select incidents that would be telling enough and substantially reported in the media enough to give readers a taste of the societal collapse and the democratic decay that is occurring in Greece under the yoke of the troika and its willing executioners among the political elites. These days its simple enough: just check the past few days' headlines.

Social collapse

On the societal collapse side Alex Politaki in the Guardian, states the obvious: Greece is facing a humanitarian crisis, deep and unprecedented during peacetime in the West:
"...There are three more indicators that point to a humanitarian crisis. First, the number of homeless people has risen to unprecedented levels for a European country: unofficial estimates put them at 40,000. Second, the proportion of Greek beneficiaries of NGO medical services in some urban centres was recorded at 60% of the total in 2012. This would have been unthinkable even three years ago, since such services were typically provided to immigrants, not Greeks.
Third, there has been explosive growth in soup kitchens and general food distribution. The levels are not officially recorded, but the Church of Greece distributes approximately 250,000 daily rations, while there are unknown numbers of rations distributed by municipal authorities and NGOs. By recent government order, municipal rations will be expanded further because of rising incidence of children fainting at school due to low calorie intake. There will also be light meals provided to young students..."

A recent survey by the Hellenic Confederation of Professionals, Craftsmen and Merchants [GSEVEE - Warning: Bad English], put some numbers behind this:
  • ...Half the population is in danger of finding themselves economically marginalized (fail to meet tax obligations, owe loans, and buy goods of inferior quality in order to meet their obligations). 
  • 93.1 % of the households have seen their incomes reduced several times during the crisis period.
  • 40% of the households have at least one unemployed member.
  • 72% of the households expect new income reductions during 2013
  • 40% of households delay paying debts in order to meet obligations, while 50% lacks sufficient income to meet their obligations.
  • 42.5% of households search for products and services of lower quality and look for enterprises that are willing to offer such products and services
  • The heavy tax burden on products and services combined with the shrinking and over-taxation of incomes “softens” tax morals thus threatening to reduce public revenues too.  47% of the population, and rising, condones various methods of sales tax and VAT evasion
  • Only 12.6% of households stated as main source of income their businesses. The main income contribution for households comes from pensions (42.6%)
  • 70% of households have cut back on food expenses, while 92% reduced expenses for clothing - footwear
All this is happening against a backdrop of record unemployment along with health indicator reversals previously unheard of in the western world, as after "three years of austerity cuts... life expectancy is dropping, while infant mortality has grown by 4 percent"...

Looting the Poor as Economic Strategy

The collapse of Greek society is evident to all but the elites and their government: After the finance minister Yianis Stournaras blamed the decline of heating oil consumption on citizens having bought heating oil before the new tax hikes - despite the widely documented shutting down of central heating in the majority of Athens flats and houses - and Finance Ministry general secretary Giorgos Mergos statement about 580 Euros (before taxes) being "too high" a minimum salary, one is certain that the people in charge have a rather inaccurate idea of what is happening in Greek streets and homes.

The latest outrage is that the government is threatening to confiscate property, wages and bank accounts of any person owing the tax revenue office more than 300 Euros. This, at a time when the tax burden has become so absurdly high in Greece that half the population does not believe they will be able to pay all of their tax, basic utility and loan obligations in 2013. Keep in mind that these are taxes on last year's incomes - and last year's incomes are significantly higher, 4 years now in a row, for a large majority of Greeks than this year's; new taxes have also been levied either as emergency contributions, or special levies, or on small, non-income bearing property that used to be non-taxable. Indirect taxes have soared. A significant portion of people are "tax-evading" nowadays as the GSEVEE survey shows, simply to be able to survive or because they have literally no money. There are furthermore persistent rumours and leaks from majority MPs that the troika is pressuring the Greek government to withdraw the legal protection against foreclosure of people's residences that has been mandated until the end of the year. This will mean mass evictions.

Thus the ministry of finance is planning to send warning letters to 2.5 million citizens, threatening to take away property (which BTW they can't sell to raise money anyway since the real estate market is dead as a doornail, and any sale is now taxed at a much higher "objective value" than its actual market price) or commandeer bank deposits and salaries, unless their owners come to some sort of settlement with the tax service. Now since the actual tax laws have become ever more regressive, richer folks can and will easily arrive at some such deal. Poorer people, including many pauperized, unemployed or even homeless will most likley not be able to afford any deal and this can lead them, even if they have nothing that the taxman can take, to prison! Even for owing as little as 3000 Euros according to the plan. So the ones most heavily targeted and affected will be the poorest, usually those with the least tax or fine debts and a real difficulty to pay up. The numbers however that the Greek Government is publishing show that cracking down on the least indebted will bring significantly fewer rewards than targetting the big fish: While 2.3 million tax-payers owing each under 3000 Euros have a total debt that adds up to 1.1 billion Euros, the top 6.270 debtors owe the Greek tax office over 35 billion Euros! This at the same time that the Lagarde list of Swiss bank account holders is causing serious trouble to the political and financial elites, despite it being just the tip of the iceberg of chronic millionaire tax-evasion...
To top all this off, the ministry of finance has circulated a proposal to have everyone over 18 file a tax report (including high-school and university students) even if they remain dependents. They, along with every living Greek no matter how destitute, will be taxed based on a fictitious income of 3000 Euros, which the government claims they must be making if they are surviving. This is literally a tax on breathing, and it means that kids living with their parents (and remember, that's a lot of people in Greece, youth unemployment is over 50%) will be taxed 75 Euros unless they can show expenses receipts that add up to 750 Euros for the year. This is in reality a double taxation of their parents incomes. Of course, more poignantly, this means that even the 40.000+ homeless must either show 750 Euros worth of expenses or else face paying 75 Euros in taxes. Insanity.

And guess what? After all this tax revenues are plummeting:
Despite big tax hikes as part of austerity measures demanded by international lenders, tax revenues fell precipitously in January, with the Greek Finance Ministry reporting a 16 percent decrease from a year earlier, and a loss of 775 million euros, or $1.05 billion in one month.
This is an economic policy leading to a failed state - a debt colony with pauperized natives. And Greece is just the guinea-pig for the rest of the EU South and beyond...

All this is of course not compatible with democracy: my next post will detail recent events in the slide towards undemocracy under the iron fist of a government of right-wing extremists...

[Edited and reposted at the European tribune