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The left-winged taxes of the right-winged government

28 November 2013 / 16:11:41  GRReporter
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Anastasia Balezdrova

Three and a half years after signing the Memorandum of financial support with the International Monetary Fund, the European Union and the European Central Bank Greece is not the same. It is now ruled by a coalition government involving New Democracy and PASOK which, until 2012, were sworn 'enemies'. Ironically, it fell on the two parties that have ruled Greece over the 40 past years to assume the responsibility of saving Greece from bankruptcy.

Over the past few months, Prime Minister Antonis Samaras, the financial team of the government and leading economists have repeatedly stated that, at the end of the year, Greece will report a primary budget surplus, albeit small. According to them, this is the first sign that the Greek economy is beginning to recover after six years of recession. The cabinet received a friendly pat on the back for its efforts but, despite the European support at the political level, the deadlock in the talks with the lenders’ representatives shows that the recovery programme is not working properly.

Each visit of the supervisory Troika brings to the fore the government’s inability and unwillingness to carry out the structural reforms that are crucial for the economy of Greece. Although it has attempted, none of the closed professions has been fully liberalised, there is mostly talk about privatisations and the shrinking of the huge public sector appears to be an insurmountable obstacle to the government. Some time ago, it became clear that despite the introduction of the single payroll table, the wages in different institutions and state enterprises are still many times higher. The pressing cuts in unnecessary personnel remain only on paper. Moreover, the term alone terrifies the cabinet and it prefers to use "mobility programme" instead of it. The government has failed to cope with the task of dismissing 2,000 civil servants by the end of the year, so the doubts that it would be able to cut 15,000 employees in 2014 are more than reasonable.

One might wonder how, under such circumstances, the government has managed not only to balance the budget but also to achieve a primary surplus. The answer is through taxes, which will further increase next year.

At the same time, according to Minister of Finance Yiannis Stournaras, the taxes imposed in Greece are not excessive which has provoked the wrath of the deputies, including those of New Democracy. Dora Bakogiannis said in parliament that the constant imposition of new taxes should stop. "If this is a temporary measure, we can take it as a position. But if you think that the taxes imposed are not excessive then things are really serious." She pointed out that "the property tax has increased eightfold and the middle class is about to collapse. Solvency declined long ago and it will soon disappear completely."

The Minister of Finance, however, firmly upholds his position. "In total, the taxes in Greece are not excessive. In 2012 they were 22.8% of GDP whereas the European Union average was 25.7%," said Stournaras, adding however that the burden is not the same for all citizens. "The regular taxpayers are taking the larger part of the burden compared with those who consistently fail to pay their obligations. Salaried people and retirees are paying and others are not," said Stournaras.

One of the most controversial is the property tax which is about to double in 2014. Seemingly, the government will find it difficult to achieve its goal to increase the income from it since the property owners are determined to fight with it by all lawful means. The Greek federation of property owners has announced that it will submit in the Greek and international courts claims against the tax. The non-parliamentary Drasi party has started a campaign against the excessive taxation on property as well.

In an attempt to support the position of the Minister of Finance, the chief secretary of the service of government revenues, Harris Theoharis, determined the property tax as "left-winged", thus provoking a number of critical comments.

"The property tax is "left-winged" and, I would add, voted by the supporters of the right wing," responded Stefanos Manos, former head of Drasi and Minister of Economy and Finance (1990 - 1993).

Even more revealing was the comment of another popular social networking member of the liberal party, namely Kostis Lympouridis, "Mr. Theoharis, all taxes are left-winged. The term "liberal tax" is an oxymoron just like the phrase "communist paradise".



Tags: PoliticsTaxesReformsPublic sectorMinistry of FinanceLiberal Drasi party
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