With the help of Greece’s international creditors, reality put the SYRIZA-led government on the well-known path of continuous negotiations, in which it is seeking to: a) protect the party’s clients – that is to protect those who feed on and are kept afloat by taxes (henceforth “tax dependents”) paid even by workers in the private sector – and b) to ensure some kind of financial support from our creditors.
The negotiating goals of the present government are no different than those of the previous administration. The style and intensity of talks has changed, but the narrative remains the same.
By seeking to protect the tax dependents, the former governments of George Papandreou and Antonis Samaras drove the country to recession and record unemployment. By seeking the same thing, Prime Minister Alexis Tsipras will also lead the country down the same path, and faster.
A lot has been written about what needs to be done but no one has appeared to do it. As European Commission President Jean-Claude Juncker has so succinctly put it: “We all know what to do, we just don’t know how to get re-elected when we do it.” Whenever I tried to do it (in the past with the Liberals party and more recently with Drasi) I was thwarted, amid much praise, by the Greek people.
PASOK, New Democracy and SYRIZA tried to deal with the crisis by drawing a big, fat, red line: They refused to fire civil servants or target tax dependents. I firmly believe that the crisis will never be dealt with unless the tax dependents are taken on. “That’s the kind of thing you say and then get just 1 percent of the vote!” Indeed. But the 99 percent that did not vote me were wrong. The recession and unemployment are proof enough.
How would the tax dependents be targeted?
– With the immediate abolition of all unnecessary state expenditure. For example, don’t reopen state broadcaster ERT now and fill up the empty positions in the healthcare system with doctors and in schools with teachers, and then sack all redundant employees (and there are a lot of them).
– Abolish privileged early retirements.
– Abolish all taxes to third parties that benefit the few to the detriment of the many. Taxes to third parties bring in about as much in revenue as the unified property tax and mainly benefit pensioners with special privileges.
– Immediately establish a systematic evaluation of tax dependents (civil servants and employees at state-owned enterprises) and sack those who do not fulfill the terms of their employment. Taxes are sacred and the tax dependents need to be held accountable for the taxes they consume.
Abolishing unnecessary state expenditure will help growth, because in order to justify their raison d’etre, the tax dependents create obstacles and complications for those who pay their taxes.
Greece needs to produce and export. It needs investment. Anything that helps production and investment is good. Anything that prevents them is bad.
Delays in the return of value-added tax on exports is bad. VAT needs to be returned immediately. Audits can be held later. Licenses for establishing a new business in a designated industrial zone need to be abolished. There can be one license for the entire zone rather than separate ones for each individual business. Utilities can be connected to the entire zone and not to each business. Another step would be turning over massive swaths of state-owned farmland to the cultivation of exportable products or to wind parks. The privatization of airports, ports, the rail network and energy need to be pushed through and public-private partnerships need to be given priority at major tourism destinations for water, sewerage, energy and ports.
The social security system has hit a dead end. Pensions are low and contributions so high that they prohibit legitimate businesses activity. I had proposed a pension (paid for from the budget) for all people aged over 67 of 700 euros a month without any contributions. Anyone wanting a better pension would have to see to it themselves. They can get it when they want, as they want, but it would have to be their responsibility. The issue is exceedingly complex. It needs to be examined but a decision also needs to be taken within the next year. If the employer’s contribution is abolished, we will see a huge leap in competitiveness and exports.
Municipalities must be funded by the residents who enjoy their services. The source of funding for local administration needs to be the local residents themselves (the direct beneficiaries) and not all taxpayers, with the mediation of the state (or the political party). This way, financially irresponsible municipal authorities will have to answer to their residents and will therefore be held accountable. Once municipalities become responsible for their own funding, they will make efforts to attract investments, which will bring in revenues and reduce the burden on their residents. Take wind-powered electricity generators, for example. On the islands of the Aegean, wind farms could cover all municipal expenses and reduce the taxes paid by residents. Once the state no longer has to pay for municipalities, it can abolish the unified property tax (which brings in as much as the state pays to local authorities).
If we want to recover from the crisis we need to change tack and do things differently than we have done so far. We need a different narrative. Imagine the reactions if instead of fancy shirts, red lines and creatively ambiguous rhetoric, we presented a program such as the one I have described here.
* Stefanos Manos is a former minister.