Greek Tax Hikes Backfire As Tax Revenues Plunge 16%

Tyler Durden's picture

There was some hope that Greece, which for the past few months was desperately trying to show it has a primary surplus when in fact it was merely shoving unpaid bills under the rug, was at least getting its runaway deficit situation under control. This, despite what many sensible people pointed out was the return of nearly daily strikes, which meant zero government revenue as zero taxes could be levied on zero wages. Turns out the sensible people were again right, and the Greek and European propaganda machine has failed once more as the Greek Finance Ministry just reported that despite big tax hikes demanded as part of austerity measures by international lenders, tax revenues fell precipitously in January, with the Greek Finance Ministry reporting a 16 percent decrease from a year earlier, and a loss of 775 million euros, or $1.05 billion in one month.

This means that the government took in only €4.05 billion ($5.47 billion) in tax revenues in January, far short of its target of €4.36 billion ($5.89 billion), a $420 million shortfall in one month, which also came during an annual holiday sales period for shops who are bleeding customers and shutting down by the thousands.

It is all downhill from here as the feedback loop of more spending cuts is activated to offset declining revenues, leading to even less revenue, and culminating with the complete collapse of Greek society.

From Greek Reporter:

If Greece fails to meet revenue targets it will trigger a correction clause at the end of each quarter of the year, setting off automatic spending cuts except for pensions and salaries. That could further harm already-depleted government services.


Finance Ministry officials attributed the decline in tax revenues to the drop in consumption, as revenues from Value Added Tax (VAT) shrank by 15 percent, while those from the special consumption taxes were also lower. Greeks hammered by big pay cuts, tax hikes and slashed pensions have cut back spending even on essential items, with supermarket sales falling 500 million euros, ($6763 million) in 2012.


The numbers could have been worse as the government gained revenues from doubled property taxes and big hikes in income taxes that have hit most Greeks except for tax cheats who continue to largely escape sacrifice or prosecution.

This may well be the last straw for a "fixed" Greek crisis - "the only options left for the government is to collect from tax evaders and improve tax collections, although tax hikes have led to many more Greeks trying to hide their income, statistics showed." Of course, nobody could have predicted that too.

The Troika and other EU countries offered to help Greece collect taxes but little interest has been shown by the government. The new General Secretary for State Revenues, Haris Theoharis, plans to meet directors of the 36 biggest tax offices in the country to study ways of collecting expired debts, according to proposals by the country’s creditors and the European Commission’s Task Force for Greece.

Does this mean that paying hedge funds at 50 cents on the dollar on their worthless Greek bonds was not the best idea?

But, but the spin was that if only all Greek debt was converted into zero coupon perpetuals all would be well?

Or maybe they were just referring to Deutsche Bank. As for the Greek population, where everyone is simply doing what they can to survive, which certainly does not mean paying taxes to the government, it is every man, woman and child for themselves.

Finally, one can only hope that the US will learn something from what this terminal collapse of a socialist utopia looks like. Sadly, it won't.

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Bad Attitude's picture

Relating to water, many people fail to consider the water and energy requirements of preparing their stored food. Basic staples (beans, wheat) require significant cooking, which involves extra water and lots of energy, before being eaten.

Racer's picture

Greece, STOP paying the banksters their blood money and then you will be much better off

Dr. Engali's picture

The people can't feed themselves and they are expected to pay taxes? Yeah right.

Whiteshadowmovement's picture

Isnt it funny that the world still goes through this whole charade of taxation? I struggle to think of a single country that could keep the lights on through taxation alone...

Dr. Engali's picture

There is no way that any country could survive on taxation alone when you have the free shit brigade to contend with. It might been a different story if we had a simpler tax code, and got rid of the corporate welfare but that will never happen.

sunnyside's picture

Taxation, not full faith, is what gives fiat currency a percieved (albeit temporary) value.

mess nonster's picture

Control must be maintained. Look at North Korea. How do you think their tax revenues have been since 1992? But who cares? The people are all slaves, and cannibalize their own children. North Korea- dystopia now, and coming soon to Obamaland.

Phroneo's picture

And yet Greeks would still probably vote to stay in the Euro. I feel for their suffering but if they were smart, all they would need to do is storm their parliament and drag their leaders out before ripping up these debt contracts. However, they don't. I just don't if I should feel sorry for them or not when i consider this. 

hapless's picture

"before ripping up these debt contracts"

I dunno.  Creditors usually keep a copy for themselves - at least the smart ones.....Oh.

BandGap's picture

Of course they will vote to stay with the Euro, who do you think is footing this bill?

My understanding is that the Greeks made a game of NOT paying taxes, even before the SHTF. I'm guessing a lot of them are boning up on Tax Evasion for Dummies as I type this.

forwardho's picture

They are a "kept" people.

You do not bite the hand that feeds you, even when that hand feeds you less and less.

They have been captured in the paridigm of "the govt is here to take care of me"

When the cost benefit ratio has tipped.

They will be taken care of.

A final solution, so to speak.

lakecity55's picture

TPTB:Fake News Media: "all greeks have converted to muslim terrorism. Drone bombing will commence shortly."

piliage's picture

So, how exactly will that EU solidarity look through the lens of a coup in Greece? I'll go pop some more corn and watch the show...


JustObserving's picture

a loss of 775 million euros, or $1.05 billion in one month

Ben is printing $85 billion a month.  Surely, he can spare $1.05 billion a month.

MiltonFriedmansNightmare's picture

Ben is printing $85 billion a month....

$85 billion a month directly, or perhaps slightly indirectly into the banksters wallets.

0$ a month to those truly in need.

The Federal Reserve Act is on point. You gotta problem wit dat? We gotta drone waiting for you, terrorist.

Mike in GA's picture

Ben prints for Obama's GLOBAL parochial limitatons for His Global Eliteness!

RealFinney's picture

March 2013, Troika meetings with the Greek finance ministry breakdown after the agenda is hijacked by a side discussion into wether the Troika Inspectors know of any cash plastering or electrical work.

LongSoupLine's picture

Greece needs to hire some Iceland advisors and shove s huge fucking fuck you lead pipe up the ass of the banks.

Fuck you TBTF assholes. Eat fucking shit.

Cypher_73's picture

Now wouldn't *that* be something 

GetZeeGold's picture



Looks like someone is betting on it.

A MASSIVE Bearish Bet Against Banks Has Traders Buzzing

j0nx's picture

Simple Laffer theory. When will politicians learn.

Bicycle Repairman's picture

LOL.  Hank may not have a high intellectual IQ, but I'm sure his other IQs are quite high.  And his handler's IQ is probably pretty high.

kridkrid's picture

nah... economic collapse caused by debt saturation doesn't have much to do with Laffer. People should not take their eyes off of the root cause and muddy the waters with meaningless theories.

Azannoth's picture

A major misconception(and a fault in the Laffer curve theory) is that the State(aka. Politicians) always prefer to maximize tax income vs tax rates, thus adhering to the Laffer curve.

This is not true in the real world, the State(aka. Politicians) always try to maximize their power not their income thus they don't care at all about the Laffer curve. Simply said they will prefer a bigger piece of a smaller pie, than a smaller piece of a bigger pie even if that means nominally smaller revenues.

Instead of trying to adjust taxes to maximize state profits they adjust taxes to find the breaking point of the economy, as we can see many European states are near or even over that breaking point.

Mercury's picture

It is all downhill from here as the feedback loop of more spending cuts is activated to offset declining revenues, leading to even less revenue,...

I don't know about that. This implies that government spending begets GDP at a greater rate than would otherwise be the case if the money to fund that government spending stayed in the private sector.

The only ways to resolve this insolvency at this point are  bankruptcy followed by government restructuring or the wholesale seizure (more forcefully than mere taxation) of private wealth by the government.

LawsofPhysics's picture

You cannot steal what doesn't exist.  I'll only add that it is possible steal physical assets and remove people by force.

Well, so long as they are not well organized or well armed.  Be sure to turn in those guns America.

IridiumRebel's picture

At work, people will ask for product that I do not which point I state, "I cannot give you what I don't got."

Azannoth's picture

And how many of those ppl will simply reply "Well than get it, duh!" ?

IridiumRebel's picture

it's funny you say that....Everyone thinks that the world just functions like fucking google....CLICK>HAVE>CLICK>HAVE.

Nope....the physical world does not work like the internet. 

mess nonster's picture

Right on, LOP.

When incomes cease to exist, they steal your guns.

When you are unarmed, they steal your houses and lands.

When you are dispossessed and living in a feeding center, they steal your physical liberty.

When you have no liberty of movement, they steal your right to time, and use whips to make you labor at their bidding.


Sixdeuce062's picture

shhh this is not country that is failing. the government has nothing to do with the people suffering. you can go and look at cat pictures now.   - trokia

youngman's picture

I wonder if obama got up this morning and read this....and a look of suprise might have come across his he sees in real life that raising taxes does not always mean more revenue......he will find out soon teh CBO rejigger their you will have to look on page 2,015 of the NYTimes...but it will be small print under the hooker ads.....

Laffer curve squared

going Galt


lakecity55's picture

I think two days ago, he was demanding more tax hikes.

Forward, Soviet!

Whoever is behind this man of mystery wants the US to collapse. A police state to enforce their new one-world ducat and have us work for food and some concrete hole for living quarters.


Quinvarius's picture

I am pretty sure someone just stole the money.  This the West, remember.  As corrupt and rotting as any Socialist enterprise.

youngman's picture

I wonder how many new people have greek Diplomatic passports now...I bet quite a few new ones have been issued....and some very big and strong briefcases

BandGap's picture

What's the over/under on NATO forces being used to quell uprisings resulting from a coup in Greece? Hell, it's just a short trip across the Mediterranean from Libya, Mali.......

Meat Hammer's picture

$97.07 - the current price of a barrel of oil

unplugged's picture

Classic Death Spiral - the end game to be repeated in all countries who's debt is TBTPB (too-big-to-pay-back)

Sudden Debt's picture


krispkritter's picture

I canno do it Captain! I dunna have Ben's printerrr!

Sudden Debt's picture



Haus-Targaryen's picture

I keep posting this, and I keep getting red arrows for it .... Scheiß egal. 


I, as long as everyone else should have absolutely zero sympathy for the Greeks.  They vote over and over again to stay in the Euro, which is exactly what is killing their economy and destroying their standard of living.  Until they start to vote en masse to ditch the Euro, and their votes are in turn suppressed I have no sympathy for them what-so-ever and neither should anyone of you. 

nicxios's picture

Yeah, like the drachma will make a big difference, especially as the currency wars heat up.

Sure, dump the Euro and have all the rest of the Europeans pissed at you as well as the U.S.A., not to mention the evil banksters who run the global show. The media will get their marching orders and scapegoat Greece as the cause of financial calamity. All that, while having to contend with an historical and dangerous enemy/neighbor in Turkey.  The banksters won't have to sic the U.S. military on tiny Greece to teach them a lesson: Turkey will be happy to do the job, with gleeful malice. They'll carve up Greece with the phony Macedonian Skopje along with Albania and Bulgaria taking a piece of the action. Hey, as a bonus maybe they'll bring back the system of jannisaries and demand only the non-raped Christian virgins convert to Islam.

Greece is stuck between a rock and hard place.


rwe2late's picture

 What is described abjectly as

"culminating in collapse" by most,

may instead be regarded by a few

as a desired transition to absentee ownership and debt peonage.

The financial titans may now profitably privatize what was public, make splendid acquisitions at fire sale prices, pay rock bottom wages, and have government act as their endless debt collector for their otherwise worthless loans and scams.

LawsofPhysics's picture

correct, and nothing will change until the heads of those few roll (if they ever do).

kridkrid's picture

^^^ this. People need to get off the laffer curve BS. The laffer curve is a political too used to obfuscate. You could tax people nothing, and if you monetary system is based on the creation of debt money with interest attached, you will end up with collapse.

mess nonster's picture

If your monetary system is based on the creation of debt money with interest attached, you will end up with collapse.

There, fixed it for you.

Jack Sheet's picture

The mistake is being repeated here of giving credence to ANY numbers being disseminated by Greek "authorities".