Tax but don’t stifle the market

Virtually everyone realizes that the country is in a state of emergency and that it will take additional taxes to pull the economy out of the fiscal black hole. There is however a limit to what Greece’s taxpayers can contribute and, if that is surpassed, the austerity measures will bring about the opposite results. The government’s economic policymakers have at times appeared not to fully comprehend the workings of the market. Often they seem to have based their calculations on the recommendations of old-style bureaucrats or tax experts who have little idea of how the markets actually work. The administration of Prime Minister George Papandreou must realize that the market will not tolerate anymore mistakes, amateur dealings and measures that could reduce liquidity at this time of deep crisis. The situation calls for sober and pragmatic policies because in addition to raising the needed revenues we also need to avoid a deep recession that could wreck the entire stabilization program.

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