Culture of debt arrangements
Governments opt for the easy solution of allowing debtors to have their arrears restructured
From the pattern of old tax case closures (“peraiosi”), Greek governments have quickly shifted to debt arrangements.
Despite the fact that since the time of financial crisis, Greece’s creditors have in the most emphatic way opposed all forms of debt regulation, successive governments have managed to pass them, creating strong reactions and provoking the criticism of the creditors, who usually requested countermeasures to achieve the fiscal goals. That led to new taxes and spending cuts, mainly through the reduction of wages, pensions, tax exemptions and benefits.
Of course, the governments claimed in defense of their positions and to counter the arguments of the creditors, that additional revenue would be collected through the reduction of tax evasion.
However, during the years of the fiscal streamlining tax evasion grew, as did the “I won’t pay” movement, so that overdue debts to the state jumped from 34 billion euros in 2010 to over €113 billion today.
Low-income tax-cutting policies, largely for the sake of votes, have worked to the benefit of tax evaders. The largest percentage of Greek taxpayers declare yearly incomes up to €10,000, when statistics show that the total declared income constitutes two-thirds of private consumption.
Although the pandemic has shown that Greeks can do it in another way, namely to operate through cards and e-banking in transactions, there are still officials in the Finance Ministry who react to the mandatory expansion of POS to all professions and to setting a limit on cash transactions of up to €500 each.
It is indicative that today many citizens buy real estate using cash. That is, the total value of a property that might cost €250,000 is paid in full in cash. The same happens in some cases with car purchases.
Of course, there are cases of taxpayers who are genuinely unable to meet their obligations. A new regulation or the possibility of reintegration should be addressed to them and not in general to all debtors.
