Gov’t attempt to weed out tax evasion proves to be hot potato

Recent attempts to contain prices at street markets have brought out into the open a problem that everyone, except perhaps consumers, has been aware of, but no one dared raise, let alone try to solve. A group of people involved in the fruit and vegetable distribution system from the farm right up to the point of sale have been operating unchecked, setting prices and playing games with the market. So it is not the laws of the marketplace that have been determining prices, but the laws of the black economy. For some time, the Ministry of Trade tried to control the situation by holding regular meetings in order to set prices. However, when this high-level monitoring ended, the laws of the black economy swung into action once more. «If you are a vendor and at all legal, in a very short time you will have to find another job,» is the general feeling expressed in off-the-record comments. Producers and vendors of street market produce who blocked the highways this week were protesting against the government’s decision to require street market vendors to use cash registers – though not for farm products for the moment. However, the vendors realized this was only a question of time. They blocked the highway tollgate used by trucks bringing fruit and vegetables into the city, demanding the group’s right to function as before, often at the expense of people working in the street markets. At Athens’s central vegetable market, the association of vendors issued a press release condemning illegal activities and agreeing with the move to make cash registers mandatory as a means of stamping out tax evasion. The association pointed out that only 18 percent of fruit and vegetables are sold from the central market, meaning that large quantities of produce were distributed without legal taxation documentation being issued, at a great loss to the state coffers. What the statement did not say were the other reasons why vendors bypassed the central market. They failed to mention the discrepancy between the prices announced over the market loudspeakers and written on bills of sale and the prices retailers actually paid. Nor did it mention the fact that the quality was not always of the best. «You buy large quantities from the central market, which of course you can’t check and which you have to sell kilo by kilo to the end consumer, who picks each tomato individually,» said one street market vendor. Street market vendors themselves refer to the bureaucratic hassle involved in getting permits issued and renewed every year. «Half of the vendors at street markets are also producers and half have a professional vendor’s permit,» said Pantelis Moschos, president of the Federation of Producers and Vendors at street markets. However, a true producer is rarely met with at a street market – they are usually out in the fields. After all, it is rather difficult for a tomato farmer from Crete to come to Athens every week to sell his produce. Producer-vendors at street markets pay a tax of 425 euros per year and their income tax is based on the yield per hectare under cultivation. They also pay a 3-percent fee to insure their fields against natural disasters and about 150 euros in municipal fees. However, no one checks to see if the fruit and vegetables they sell are from their own fields, as they are supposed to be, or whether they have bought them somewhere else. In fact, in each street market stall, there is often a large variety of produce that would need to come from huge holdings. It is also hard to believe that the foreigners selling from street market stalls are producers or even have a vendor’s permit, given the difficulty with which these permits are issued – and they cannot be sold but are only transferable to an immediate family member. Real producers are the least able to determine prices. Producers and vendors at street markets sell at the same prices, although the former would be expected to have less overhead costs. Professional vendors pay an annual tax of 528 euros and 8 percent VAT on the products they buy from the wholesaler (whether in the central market or elsewhere), as long as they have the documents for all the quantities bought. By law, they can sell fruit and vegetables for a profit of 22 percent. However, as they themselves admit, the market is a free-for-all, despite the bureaucracy and the alleged guarantees of the central market. At the end of this long chain are the consumers, who always end up paying the price for all the problems. For, naturally, no vendor will agree to reduce his profit margin. Army of middlemen have withering effect on producer’s percentage We might be paying a lot for some products, but it is not the producers themselves who are setting the prices. Wheat accounts for only 5-10 percent of the cost of bread. Products pass through an army of middlemen before reaching consumers, nudging prices up each step of the way. «Although the producer’s percentage is decreasing, the cost of the stages between producer and consumer is increasing,» according to Alexandros Sarris, professor of agricultural economy. Meanwhile, producers are having to pay high prices for other goods as consumers. Real price rises are mainly made by the powerful network of retail vendors, according to the Panhellenic Confederation of Unions of Agricultural Cooperatives (PASEGES). The process is a complex one. Market garden produce, where the greatest price variations occur, is sold at a fixed price to the wholesaler, who adds his profit and transport costs – about one to six cents per kilo, depending on the distance to market. «Sometimes the transport cost is greater than the value of the goods being carried,» said Aris Zorbas, trade director of Biophysi, a company that processes and distributes agricultural products. The wholesaler also estimates that about 15 percent of his product will not be suitable for sale. Often one has to add the profit earned by the packager. The further away from the producer and the closer to our homes, the higher the price. In France and other countries, consumers’ unions have made arrangements with specific producers to be supplied with fruit and vegetables direct.