Greek Tax Hikes Backfire As Tax Revenues Plunge 16%
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.
- advertisements -