Turning the page realistically
At some point we need to adopt a more practical approach to a number of sensitive issues and abandon the Northern European dogmatism that reads well on paper but has little practical effect. I am specifically referring to the ongoing talks between the government and the troika for steps to repatriate Greek capital that has been transferred abroad.
The troika and certain government officials have so far opposed the idea of an agreement that would effectively legalize deposits that may be illegally acquired or the product of tax evasion. It is true that there is no point in repatriating tainted money and legitimizing it at a time when you are trying to change people’s attitudes to tax evasion. That said, a lot has changed since the start of the crisis. Tax control mechanisms have improved significantly and are able to act as a deterrent, at least to those flirting with the idea of breaking the law.
The country, however, is at crucial juncture and must turn over a new leaf. We have to find a way to make sure than anyone who embezzled public money or committed a crime is punished. On the other hand, we need to prop up our banks and boost the market and growth. The conditions are ripe for such a move, at least on an international level, though less so on a domestic one. Tax havens are gradually shutting down or implementing stricter controls. Switzerland, for example, is no longer the sure bet it was for seasoned tax dodgers and they know that their other options carry greater risks. On a practical level this means that there are Greeks who would even be willing to give up a large chunk of their deposits abroad in order to be in the clear once and for all.
But is anyone willing to do this knowing that a new government may come along to cancel the related legislation and go after those who have declared their assets abroad? It’s a difficult question, but people who know how the market works believe that with certain guarantees and under certain preconditions, the scheme could prove successful. They believe that the money that could come back to Greece or be officially declared may be as much as 100 billion euros.
So what would the benefits be? Part of the money would return to Greek banks and would go a long way toward ensuring that they pass their stress tests this coming fall. The real estate market would also stand to win and of course the state would reap significant revenues from the fines it would impose on those who want to bring their money back.
I understand that there is a huge moral dimension to this issue but we need to be practical, realistic. If we want to turn the page and start functioning like a normal country this is the better course. If we would rather take the moral high ground, without reward and results, then we should just do nothing.
So, let us look to other countries that have succeeded in both respecting their institutions and maintaining a realistic position, such as the US, for example, which is increasingly stepping up effort to combat tax evasion while at the same time offering opportunities for amnesty.