Tax reform architect: ‘I wonder whether we’ve all gone mad’
Professor Theodoros Georgakopoulos, president of the Greek Taxation System Reform Commission, spoke to Kathimerini about the response to the commission’s proposals, dismissing accusations that the recommended measures would put a burden on the economically weaker strata of society. He calls for a careful reading of these proposals, bearing in mind the country’s main aim, particularly now, which is to improve the Greek economy’s competitiveness. One of the recommendations of the report is for a reduction in the maximum tax rate, down as much as 35 percent, on the basis of positive economic prospects in the coming years and gains from implementing the proposed reform. Georgakopoulos has great faith in the commission’s work and passionately defends measures favoring citizens. He does not hesitate to distance himself from politicians and their priorities. It has been said that your proposals to reform the tax system will put more of a burden on lower and middle-income households and will favor major capital and industrialists. Haste is a bad thing, as these critics (even certain media which rushed to condemn the proposals, clearly before reading them) ought to know. If that is what they understood from the report, then they haven’t understood anything at all and make me wonder whether we haven’t all gone mad in this country. I will note three examples: First, the suggested scale does not affect the low and middle-income groups but reduces taxes by up to 100 percent on the lowest incomes and only 5 percent on the highest income groups. How can the abolition of the imputed criteria for expenditure and property acquisition harm the lower income groups, when 95 percent of those who pay taxes according to this criteria actually declare incomes that are below the taxable limit? How can the lower income groups be harmed by the abolition of certain tax deductions that benefit higher scales 10 or 20 times more than the lower scales? How can they be harmed by the abolition of deductions when only 5 to 15 percent of them benefit from these, compared to 40 percent of the higher-income groups. Perhaps they have not noticed that according to our proposals, everyone will benefit to the same degree – 20 to 25 percent. Who stands to lose by the abolition of all privileges that various privileged groups managed to secure during the post-war period? I draw your attention to the long list of special income taxes. None of these are included in the lowest income brackets. The prime minister said that the government is not bound by your commission’s proposals. Does that bother you? I, myself, did not hear the prime minister say that. If he did, I am quite satisfied because it confirms what I have said repeatedly. The commission was not set up to make proposals to a minister or a government. Otherwise, as anyone who knows me could guess, I would not have taken on the job because of my «unusual» views as regards the role of academia in our society. This commission was set up to submit proposals as a basis for resolving the huge problems our society is facing in the taxation sector and which could be adapted to the political platform of ministers or the government as a whole. I believe that the commission’s members acted as civil servants. We do not make policy. I believe that our recommendations successfully target many of the problems in the tax system. Therefore, I suggest that everyone read them carefully before dismissing them, as it is a pity to treat such a serious issue in a summary fashion. Some people claim that the recommendations are simply a way of creating more revenue for the state coffers and will invariably lead to a further burden on the economy. Once again, they have obviously not read them properly. The commission clearly recommends that the government reduce tax by 2 to 3 percentage points – meaning a reduction to the order of 1 to 1.5 trillion drachmas ( 3 to 4.4 billion euros) – over the next three or five years. These people have obviously not even read the summary. I think that, even out of respect, they should tell the people whom they are deceiving how they actually drew their conclusions. You suggest reducing taxes on industrial fuel? Doesn’t that favor the rich? This has nothing to do with industrialists’ income but with the competitiveness of the Greek economy. In all the countries of the European Union, with the exception of perhaps one, petroleum for industrial and commercial use comes under the lowest taxation bracket. In Greece, it is double the European Union average. Is it so difficult to understand that this harms our competitiveness and, therefore, production and employment? We complain about high unemployment but we are quite prepared to lash out at the person who has wealth and creates jobs, as if we knew something that the «silly» Europeans don’t. We should realize that reducing the tax on petroleum for production actually benefits consumption. On the other hand, who does it harm if, instead of paying higher taxes on fuel prices, which harms competitiveness, gasoline becomes proportionately more expensive. Gasoline is currently taxed much lower in Greece than in all other EU states. One should consider that gasoline is consumed by low income households, who sometimes have two or three cars, and is paid for by the higher income earners, who spend more, perhaps all of their income, on basic goods since petroleum is needed to produce these goods and increases their cost and selling price. Are we really so ignorant in this country or do we simply like to indulge in populism and irresponsibility?
