This page has been archived and commenting is disabled.

Euro Optimism Surges, A Greek Tax Revolt Flares Up: It’s Decision Time

testosteronepit's picture




 

Wolf Richter www.testosteronepit.com

Euro optimism is once again gushing through the system on the hope that the debt crisis could be wished away with a nod by German Chancellor Angela Merkel or with a wink by the Bundesbank in direction of the European Central Bank, which is dying to print unlimited amounts of moolah to buy sovereign bonds—and old bicycles, if it has to—in order to force yields down for debt-sinner countries like the US Spain and Italy.

There is even hope that sudden German “flexibility” might solve the Greek debacle when Prime Minister Antonis Samaras heads to Berlin for his session with Merkel, based on indications in Germany that those with the power to say “no” are getting cold feet. But there was an incident in Greece that they should bear in mind.

It started Friday on the island of Hydra, a tourist spot of 2,700 souls. Officers of the financial police checked taverns, bars, and souvenir shops for tax violations. At a seafood tavern, an inspector discovered that patrons weren’t given Value Added Tax receipts, though required by law. An old trick: cash income remains undeclared and disappears; the VAT, though collected from customers, also disappears rather than being turned over to the state.

To investigate the case, the owner was taken to the police station, where she fainted. So she was taken to the hospital under guard. Her 25-year old son who worked at the tavern and copiously insulted the inspectors was also arrested—the straw that broke the camel’s back. Enraged, people threw rocks and firecrackers at the police station, shut off water and power, and demanded that the guy be released. Others blocked the port to prevent ferries from docking so that police couldn’t transfer him to Athens. Some forced their way onto a ferry and scuffled with the crew.

The next morning, riot police from the mainland made their way through the shouting people to the police station and freed the officers of the financial police holed up in there. The owner’s son was released because he wasn’t the owner; he claimed he’d planned on issuing receipts to his patrons, or whatever. On Sunday, his mother was taken off the island. The tax revolt in Hydra came at an inconvenient time: just before the all-important meeting in Berlin. So the Greek government was quick to condemn the revolt.

But tax fraud is pandemic in Greece. The financial crimes squad (SDOE) announced today that 4,067 taverns, bars, souvenir shops, and the like on 46 islands and in prominent tourist locations on the mainland had been checked between July 6 and August 19; of which 55.7% had committed violations. It’s been getting worse, in tandem with the economy. Last year, violations were found in 53% of the establishments. And there had been other incidents of revolts, writes Angelos Stangos:

On Lemnos in 2009, outraged business owners tried to push a group of tax inspectors into the sea, obviously in an effort to terrorize them into not running another inspection on the island. The practice has manifested itself in a variety of forms over the years, with a rich array of excuses presented as to why certain people should be allowed to get away with not paying taxes.

Tax fraud from the bottom to the top of society is one of the causes of Greece’s financial problems: the money just isn’t coming in. Now, costly promises politicians made to their voters have to be broken. For years, Greeks benefitted from the artificial manna of cheap euro debt and European Union funding, but the system has run into a wall—and Merkel has an opportunity to decide if taxpayers in Germany and other countries (including the US through participation in the IMF) should fork over endless billions to fund benefits, services, and boondoggles that Greeks themselves refuse to pay for.

The other option is default. “A weapon of the weak when they reach the point of not being able to pay their debts,” said Panayiotis Lafazanis, a Greek politician. Closer to the truth than anything else emanating from his wily colleagues in parliament. The government is already selectively defaulting on its obligations, paying only salaries and pensions of civil servants. Other disbursements have been stopped. And nothing works anymore. Read.... The Greek Bailout Sham Is Getting Gummed Up.

So should Greece, as it has been suggested, follow in the footsteps of Argentina, which rose from the ashes after its default? Not so fast. To stave off another collapse, the government in Argentina is imposing ever more trade barriers and capital restrictions. Read.... Argentina’s Creeping State Control, by stilettos-on-the-ground economist Bianca Fernet.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 08/22/2012 - 15:24 | 2728405 Zero Govt
Zero Govt's picture

" Enraged, people threw rocks and firecrackers at the police station, shut off water and power, and demanded that the guy be released. Others blocked the port to prevent ferries from docking so that police couldn’t transfer him to Athens. Some forced their way onto a ferry and scuffled with the crew. The next morning, riot police from the mainland made their way through the shouting people to the police station and freed the officers of the financial police holed up in there."

Oh for a bit of that (and lots more of it) in the rest of Europe

Police bullying small business set off the Egyptian revolution.. this is the battleground as small biz, not big, pay all the taxes yet get all the contempt, arrogance and abuse from Govt

"On Lemnos in 2009, outraged business owners tried to push a group of tax inspectors into the sea.."

The Greeks not only have balls, they are creative with it.... splendid :)

Viva La Tax Revolt.... tell Lagarde where she can stuff her handbag

Wed, 08/22/2012 - 15:42 | 2728494 dogbreath
dogbreath's picture

Nicos, he such a good boy!!

Wed, 08/22/2012 - 11:59 | 2727607 supermaxedout
supermaxedout's picture

When the VAT was introduced in Itay appx 12 years ago fines were high for not giving each client a receipt which showed the correct VAT. Shopkeepers had to hand out the receipt to you if you like or not and you had to accept it. The shop keepers even followed you to the street if you did not take the receipt. You had to. This is the law in Italy. Till today. Now everything cooled down a bit. But in a restaurant its still mandatory that you get an official bill for your orders. Complete with official registration number of the document etc.

At the same time  (appx 12 years ago) also in Germany it became mandatory to issue cash register receipts including registration numer and VAT showing. What happened at that time a lot of cash registers were sold, many more then one could expect. The reason:  the bar and restaurant owners do hide a second set of cash register machines and have to work overtime since then to print the second set of receipts which mutates into the official one for the taxes. And of course one can still find a lot of bars and restaurant which do not accept credit cards. Especially Chines restaurants. They accept only cash and there is a reason.

So the Greeks just have to ask their German, Italian and  Chinese colleagues how to cheat the tax in a more sophisticated way. Long cash registers in Greece!

 

Wed, 08/22/2012 - 10:17 | 2727115 NEOSERF
NEOSERF's picture

Taxation is so 20th century.  What they need is Samaras to find a pair, stand up in front of the people and tell it like it is.  You don't pay taxes.  Taxes are what the government uses to keep order and pay for the safety net.  The government now cannot do both because its people don't want to pay taxes.  Fair enough, given the choice, government opts to keep order and abandon's its obligations to the safety net.  The budget shall be balanced based on emergency cuts starting next week.  Have a good afternoon.

Wed, 08/22/2012 - 12:35 | 2727740 SmallerGovNow2
SmallerGovNow2's picture

The taxes are so burdensome that people have no alternative but to cheat.  That's the problem.  The more central planning and bigger government the more they try to tighten the grip which is where it all starts to fall apart.  Decentralization and smaller government is the only way out of this mess.  Socialism has been a failed experiment throughout history...

Wed, 08/22/2012 - 14:46 | 2728268 northerngirl
northerngirl's picture

Why is decentralization such a difficult concept to accept?  I guess it's just easier to be a tax cheat?

Wed, 08/22/2012 - 09:25 | 2726890 Grand Supercycle
Grand Supercycle's picture

.

Wed, 08/22/2012 - 09:23 | 2726884 Grand Supercycle
Grand Supercycle's picture

Risk off sentiment ~ SPX 8 hour bearish warning continues and FTSE daily chart gives bearish warning.

Of course central bank intervention could reverse this scenario and burn more shorts...

http://www.zerohedge.com/news/2012-12-24/market-analysis

Wed, 08/22/2012 - 09:13 | 2726860 Dodgy Geezer
Dodgy Geezer's picture

 "...The financial crimes squad (SDOE) announced today that 4,067 taverns, bars, souvenir shops, and the like on 46 islands and in prominent tourist locations on the mainland had been checked between July 6 and August 19; of which 55.7% had committed violations."

 

".. of which 55.7% had been caught committing violations. 44.3% were not actually caught this time..."

 

There, fixed that for you...

Wed, 08/22/2012 - 11:40 | 2727509 DeadFred
DeadFred's picture

Of which 44.3% came up with the appropriately sized bribe donation for the authorities.

Wed, 08/22/2012 - 09:13 | 2726859 Dodgy Geezer
Dodgy Geezer's picture

 "...The financial crimes squad (SDOE) announced today that 4,067 taverns, bars, souvenir shops, and the like on 46 islands and in prominent tourist locations on the mainland had been checked between July 6 and August 19; of which 55.7% had committed violations."

 

".. of which 55.7% had been caught committing violations. 44.3% were not actually caught this time..."

 

There, fixed that for you...

Wed, 08/22/2012 - 10:14 | 2727100 NEOSERF
NEOSERF's picture

Wow, how much tax inspection staff must you have to visit 4K+ taverns...I wouldn't be able to walk after the third one that offered me my "gift" of ouzo...also the other 44% is clearly friends and family of the tax inspectors.

Wed, 08/22/2012 - 12:04 | 2727626 Things that go bump
Things that go bump's picture

The logical progression of these sorts of incidents indicates that soon those tax inspectors are going to be beaten and then they are going to be killed. 

Wed, 08/22/2012 - 15:52 | 2728526 Zero Govt
Zero Govt's picture

killing tax inspectors is going too far

knee-capping them and dumping a few hundred of them in Rockerfellers/Rothchilds back yard is the more elegant option

Wed, 08/22/2012 - 08:02 | 2726642 No Euros please...
No Euros please we're British's picture

But taxation is just a barbarous relic.

Wed, 08/22/2012 - 10:03 | 2727003 OneTinSoldier66
OneTinSoldier66's picture

And so is politicians saving up enough money to buy the moon, prior to making the promise to deliver it.

 

In General: Savings and incentives to save, what barbarous relics!

Wed, 08/22/2012 - 07:17 | 2726578 nicxios
nicxios's picture

The tax revolt is one thing, but to collect VAT from customers and then pocket it, well fuck them. Rot in jail bitch! You're a fucking 2 bit thief no better than the State!

I went to taverns in Greece last year where they didn't charge VAT, but they asked us in advance if it would be OK with us, and of course made it clear the bill would be much cheaper. THAT'S THE WAY TO DO IT.

Wed, 08/22/2012 - 19:59 | 2729037 123dobryden
123dobryden's picture

didnt really  get your point, you paid the market price, didnt you?

Wed, 08/22/2012 - 06:54 | 2726563 new game
new game's picture

u put to thought our constructs  [destructs] - will not compete on that accord.

print the fuckin shit so my play looky better than yday...

inflat that mort away, ah but i got livg exp w no pay raise; some how fd again.but wait i'ma minimalist

w no i-fuck monthly and cable less. hedged against the payers. win for now...

back to da cabin w/40 and wood to chop-a cold winter ahead ya now...

 

Wed, 08/22/2012 - 07:24 | 2726587 covert
Wed, 08/22/2012 - 05:30 | 2726502 falak pema
falak pema's picture

Wolf has been barking about the Eurozone being the weak link in this mad Oligarchy race to bottom.

The whole debate on ZH has been, not WHY but WHEN? When will the Euro zone implode?

And its true, as part of Pax Americana monetary construct, the Eurobanks and Euro sovereigns are up to their necks in the same financialised feces that drowns the US/UK/Japan nebulous and now by riccochet the BRICS.

USD and Euro are more mad and sick sisters of the first world financial construct than rival queens vying for world dominance.

But if the bottom line is to deleverage debt to cure the disease, who is more capable to bite the bullet in the deleveraging game becomes the real question. Will the Euro zone be able to sit out the inevitable shit storm of deleveraging, which we call a reset that looks inevitable, by buying time?

Forever evanescent commodity, like sifting sand, like water droplet in empty hand, Time is the most precious of illusions that is  left to hubristic man! And how do you buy time?

Why on that all governments and Central Banks are on the same page in first world : By printing funny money to infinity!

All except Mutti Merkel. She is the odd one out who does not want to jump into this cesspool; sInce 2009!

Crazy dictat of hiding one's head under the blanket, pretending the financialista cabal does not exist! 

But its all a show. She knows she has to jump in, so she dilly-dallies to save her reputation as Iron Princess of German resistance; knowing full well that the financial contagion has already condemned her BANKS to oblivion and therefore she has no choice but join the print lobby; hoping that this last minute foot shuffling and hand wringing will save her OWN political future in 2013 election. "I did try very hard to save our own national future, but we must sacrifice to save the world!"

So now the capitalista cabal of this derelict train wreck we call Pax Americana financial construct can move on to its final destination of kicking the can and printing until the cows come home. Hoping somehow deleveraging will work like magical powder sprinkled from high heavens, by the merciful Gods above.

And the world will stay in step in printium Hope and fiat Dope, knowing full well that every month down this road makes the future cry its rotten name on the shame game of socialisation of cumulative public debt and the sham curtain of steroid pumped private, Caymanista profits.

Lame duck construct which portends a frightening future full of blood and fury, down the road of world serfdom to Oligarchy neofeudalism.

May the desperate and the damned of the third world rise to defy the will of this corrupt new world order! This social status now includes the middle classes of the so called "first world".

That welfare state construct, now a pale, increasingly fading memory of the past, cedes to this dire future of uncertain but brutally selective musical chairs.

Play on the fiat electronic money hose fueling the funeral pyre of the bonfire of our oligarchical vanities. 

Wed, 08/22/2012 - 12:18 | 2727669 supermaxedout
supermaxedout's picture

My opinion: Euroland is not printing to save the banks again. They only try to take care for the souvereigns. They will let the banks go bust no matter what happens.

The Swiss made in 2008 already law not to intervene in case their giant banks (UBS, Credit Swiss) go bust. The law says, that the parts needed for a functional banking system are taken over by the government (saving account, checking accounts etc) so that the country continues to function. The rest, good bye.

Bad for the US giant banks. Bernanke please save the Swiss banks, this will be their cry!

This will be then one bailout to much. I believe then revolution really starts in the US.

 

Wed, 08/22/2012 - 04:39 | 2726480 Negro Primero
Negro Primero's picture
Euro Optimism Surges...

 

 

The Happenings - See You in September
Wed, 08/22/2012 - 12:45 | 2727772 SmallerGovNow2
SmallerGovNow2's picture

Great old tune.  And very appropriate I might add....

Wed, 08/22/2012 - 09:38 | 2726932 falak pema
falak pema's picture

as a reminder of the technicalities of the USD vs Euro reserve currency debate please refer to this link to LowProfile's defense of the Euro :2722575

Wed, 08/22/2012 - 03:48 | 2726462 nathan1234
nathan1234's picture

Govt's want to collect more tax. Employ people to collect more tax to pay govt employees their salaries.

Those who live off the earnings and spendings of others and create nothing tangible need to be removed from the system.

People need minimum Govt. and minimum interference from the Govt.

People are not slaves to the Govt they elect. Right now the tables are turned which needs to be set right.

 

Wed, 08/22/2012 - 18:01 | 2728846 Meremortal
Meremortal's picture

Those who live off the earnings and spendings of others and create nothing tangible need to be removed from the system.

People need minimum Govt. and minimum interference from the Govt.

People are not slaves to the Govt they elect. Right now the tables are turned which needs to be set right.

;;;;;

This is so simple. Why haven't they just done it everywhere?

/s

Wed, 08/22/2012 - 12:46 | 2727779 SmallerGovNow2
SmallerGovNow2's picture

Excellent point nathan...

Wed, 08/22/2012 - 08:37 | 2726735 LawsofPhysics
LawsofPhysics's picture

This goes way beyond government.  Think of bankers and other paper-pushers.  Tell me, what "tangible thing of real value" do these fuckers create again?

Wed, 08/22/2012 - 12:13 | 2727656 shovelhead
shovelhead's picture

The debt that Greeks can default on.

"We borrowed those 0's and 1's to give to you.

Give us our digits back."

"Sorry, we need to borrow more digits to do that."

Passing around fictional data entries as representative of wealth.

Surreal.

Wed, 08/22/2012 - 07:41 | 2726607 disabledvet
disabledvet's picture

i'm not sure how efficient arresting so called "non-taxpayers" is however. (they aren't paying the VAT...but they are providing economic activity are they not? What if the bar were to simply be closed? Then what?) It seems like the State is devouring itself...downsizing the private sector (to zero) while making sure the...what are they called?..."financial police"?...go about arresting people for "financial activities." where is the money going again? perhaps more importantly...HOW is the money going again as well...

Wed, 08/22/2012 - 03:03 | 2726438 Peter Pan
Peter Pan's picture

The Greeks are already paying 23% value added tax and they also pay $2.50 per litre for petrol which is over $10 a gallon. In addition they pay property taxes and a raft of some 20 odd other taxes and have had their pensions and salaries cut in half.

Is it any wonder the poor bastards are trying to avoid some taxes now?

Wed, 08/22/2012 - 08:04 | 2726651 boogerbently
boogerbently's picture

"and have had their pensions and salaries cut in half."

I think that is the point. They pay the taxes we all pay, but don't pay income tax.

They have "agreed" to austerity measures, but have not IMPLEMENTED them. SO, there has been NO NET CHANGE in Greece. They are basically saying, "Give us the money.....we won't change a thing, just give us the money."

Wed, 08/22/2012 - 04:28 | 2726477 Ar-Pharazôn
Ar-Pharazôn's picture

LOL it's not that high. did you ever see how much they pay in Italy?

 

in certain cases in Italy the fiscal pressure go up to 65%

 

so no i dont guess why the greeks dont pay taxes

Wed, 08/22/2012 - 01:30 | 2726375 Joe A
Joe A's picture

This has been going on for decades. You can't get a VAT bill in Greece. You only get a cash register print out. They don't like to pay VAT to the state? Well, consumers also don't like to pay VAT. Next time I am in Greece, perhaps I should deduct the VAT when I get a bill. See how the owners of restaurants would like that. I guess I will be pushed in the sea as well.

Wed, 08/22/2012 - 16:41 | 2728665 Oldrepublic
Oldrepublic's picture

In most of the EU a non resident of the EU, e.g, from Canada, Australia, etc.,can get VAT back on a major purchase after leaving the country,not in Greece, people there did not want my business when I asked about the refund

 

Wed, 08/22/2012 - 00:36 | 2726328 EscapingProgress
EscapingProgress's picture

Coming to an America near you!

Wed, 08/22/2012 - 15:46 | 2728504 Zero Govt
Zero Govt's picture

Good

Sooner the Tax Revolts break-out the better

Productive vs Un-Productive (parasites) ...that's what this all boils down to

Tue, 08/21/2012 - 23:57 | 2726291 Nachdenken
Nachdenken's picture

Who feeds the dead dies of starvation.

Tue, 08/21/2012 - 23:35 | 2726260 q99x2
q99x2's picture

Not again. Still. Always and forever.

Tue, 08/21/2012 - 22:40 | 2726148 TahoeBilly2012
TahoeBilly2012's picture

Sounds like the each island could just suceed from the Mainland if they wanted at this rate, who would stop them?

Wed, 08/22/2012 - 01:57 | 2726396 Bringin It
Bringin It's picture

TB2012 Sounds like the each island could just suceed from the Mainland if they wanted at this rate, who would stop them?

Simple.  The Turks. 

Wed, 08/22/2012 - 12:00 | 2727605 Things that go bump
Things that go bump's picture

Maybe the taxes are lower in Turkey.  They might decide that for the 1st time in millenium Turkey looks like the better option.  The Turks could finally conquor Greece without a shot being fired.  

Tue, 08/21/2012 - 23:30 | 2726250 CrashisOptimistic
CrashisOptimistic's picture

For the 9 millionth time:

1) Greece's PSI procedure eliminated any significant liability to private bond holders.

2) The remaining bond holders who want to collect interest and principal are the ECB, IMF and EU in general  THEY loaned Greece the money owed, and if there were a default, THEY get smacked.

3) THERE IS NO DEFAULT.  Greece can declare they are not paying, and the Troika can IGNORE THEM.  Keep sending them bills.  Even arrange a surcharge on Greek oil imports.  But make no mistake about it, they WILL be paid and Greece WILL be in debt FOREVER.  

4) Oil forces this.  There is no life without oil to cart food to grocery stores on trucks.  Greece imports all of it.  The EU can blockade their ports and get paid.  Simple as that.  They can deny Greece oil unless Greece pays.  There Is No Default.  

5) Greece's only solution, seriously, the only solution is evacuate the entire country.  Only if there is no Greece can there be no debt.

Wed, 08/22/2012 - 09:33 | 2726917 g speed
g speed's picture

Let me get this straight ----- Greeks that don't pay taxes won't black market oil cause the "EU" says no no can't do that--

Drugs get in but oil never will cause the EU says it won't--lol You probably won't use any black market smuggled oil but rest asured everone else will.

Wed, 08/22/2012 - 10:08 | 2727066 CrashisOptimistic
CrashisOptimistic's picture

You do not understand magnitude.

You can get a couple of truckloads of drugs past a blockade.

You can't get FOUR HUNDRED THOUSAND 42-gallon BARRELS OF OIL PAST EVERY SINGLE DAY.  That's what Greece burns: 400K bpd.  Without it, they die.

Wed, 08/22/2012 - 19:11 | 2728964 donsluck
donsluck's picture

Agreed you can't smuggle that much oil. But die? I doubt it. Greece starving will not be permitted. Their economy will contract seriously, but you don't need as much oil as you think.

Wed, 08/22/2012 - 04:32 | 2726479 Ar-Pharazôn
Ar-Pharazôn's picture

do you think that it's the first time that Greece use the default weapon? LOL

 

they already did it like 7 times in the last 300 years so.....

Wed, 08/22/2012 - 10:09 | 2727074 CrashisOptimistic
CrashisOptimistic's picture

Odds are that debt is still being collected.

Do NOT follow this link or you will be banned from the site!