Even the poor are consumers

It is difficult to reconcile the image of prosperity with recent reports of Greek households’ financial straits and over-indebtedness. According to the Bank of Greece, 49 percent of Greek families owe the banks money. In the first half of 2005 alone, a million new consumer loans were granted and 2.2 million new credit cards issued, sending total household debt to the banks to 57.6 billion euros. «People borrow money in order to go shopping,» said Platonas Monokroussos, an economic analyst at Eurobank. «The rate of increase of consumer loans has reached 30 percent,» he said, adding that the trend was not restricted to Greece. «The rise in available income, combined with the increase in credit use as a means of funding, has made these goods more accessible,» he said. Today it is easier to buy a plasma TV since technological advances have brought lower prices. As for telecommunications, expansion is due to the deregulation of the market, which in turn has helped reduce the cost of appliances and, of course, people’s need to communicate. The National Statistics Service found there are still major financial inequalities within Greek society. The average consumer outlay by the richest 20 percent of the population is 5.90 times greater than the average for the poorest 20 percent; meanwhile, 20.8 percent of the population are threatened with poverty. Although he does not question these figures, Constantinos Aivalis, an economic adviser for business research company ICAP, said this indicator was unreliable. «Naturally there are both poor and rich people in Greece, but we have to take into account the the para-economy in Greece. A plumber, for example, rarely gives receipts. The unequal distribution of income is more evident within professions,» he said. Yiannis Sakellis, director of the National Center for Social Research, mentioned another parameter. «As long as we are in a growth phase, the poverty line rises along with living standards. A poor person of 10 years ago had a very different life than one today.» However, Sakellis emphasizes that there is also an unequal distribution of the tax burden. «If we consider that taxation revenues in Greece come mainly from indirect taxes, the lower income groups pay a greater price. When, for example, the indirect tax on fuel is raised, the only reaction is not to buy. But the same does not apply to basic items. Fortunately there is a gradual shift toward direct taxes.»

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