The Big Fat Greek Gravy Train
http://www.dailymail.co.uk/news/art...ture-greed-tax-evasion-scandalous-waste.html#
Andrew Malone
25th June 2011
Even on a stiflingly hot summer's day, the Athens underground is
a pleasure. It is air-conditioned, with plasma screens to entertain
passengers relaxing in cool, cavernous departure halls - and the trains
even run on time.
There is another bonus for users of this state-of-the-art rapid transport
system: it is, in effect, free for the five million people of the Greek
capital.
With no barriers to prevent free entry or exit to this impressive tube
network, the good citizens of Athens are instead asked to 'validate'
their tickets at honesty machines before boarding. Few bother.
This is not surprising: fiddling on a Herculean scale — from the owner
of the smallest shop to the most powerful figures in business and politics
— has become as much a part of Greek life as ouzo and olives.
Indeed, as well as not paying for their metro tickets, the people of
Greece barely paid a penny of the underground’s £1.5 billion cost
— a ‘sweetener’ from Brussels (and, therefore, the UK taxpayer)
to help the country put on an impressive 2004 Olympics free of the
city’s notorious traffic jams.
The transport perks are not confined to the customers. Incredibly,
the average salary on Greece’s railways is £60,000, which includes
cleaners and track workers - treble the earnings of the average private
sector employee here.
The overground rail network is as big a racket as the EU-funded
underground. While its annual income is only £80 million from ticket
sales, the wage bill is more than £500m a year — prompting one Greek
politician to famously remark that it would be cheaper to put all the
commuters into private taxis.
‘We have a railroad company which is bankrupt beyond comprehension,’
says Stefans Manos, a former Greek finance minister. ‘And yet, there
isn’t a single private company in Greece with that kind of average
pay.’
Significantly, since entering Europe as part of an ill-fated dream by
politicians of creating a European super-state, the wage bill of the Greek
public sector has doubled in a decade. At the same time, perks and fiddles
reminiscent of Britain in the union-controlled 1970s have flourished.
Ridiculously, Greek pastry chefs, radio announcers, hairdressers and
masseurs in steam baths are among more than 600 professions allowed to
retire at 50 (with a state pension of 95 per cent of their last working
year’s earnings) — on account of the ‘arduous and perilous’
nature of their work.
This week, it was reported that every family in Britain could face a
£14,000 bill to pay for Greece’s self-inflicted financial crisis. Such
fears were denied yesterday after Brussels voted a massive new £100bn
rescue package which, it insisted, would not need a contribution from
Britain.
Even if this is true — and many British MPs have their doubts —
we will still have to stump up £1billion to the bailout through the
International Monetary Fund.
In return for this loan, European leaders want the Greeks’ free-spending
ways to end immediately if the country is to be prevented from
‘infecting’ the world’s financial system. Naturally, the Greek
people are not happy about this.
In Constitution Square this week, opposite the parliament, I witnessed
thousands gathering to campaign against government cuts designed to save
the country from bankruptcy.
After running battles with riot police, who used tear gas to disperse
protesters, thousands are still camped out in the square ahead of a
vote by Greek politicians next week on whether to accept Europe-imposed
austerity measures.
Yet these protesters should direct their anger closer to home — to
those Greeks who have for many years done their damndest to deny their
country the dues they owe it.
Take a short trip on the metro to the city’s cooler northern suburbs,
and you will find an enclave of staggering opulence.
Here, in the suburb of Kifissia, amid clean, tree-lined streets full
of designer boutiques and car showrooms selling luxury marques such as
Porsche and Ferrari, live some of the richest men and women in the world.
With its streets paved with marble, and dotted with charming parks and
cafes, this suburb is home to shipping tycoons such as Spiros Latsis,
a billionaire and friend of Prince Charles, as well as countless other
wealthy industrialists and politicians.
One of the reasons they are so rich is that rather than paying millions
in tax to the Greek state, as they rightfully should, many of these
residents are living entirely tax-free.
Along street after street of opulent mansions and villas, surrounded
by high walls and with their own pools, most of the millionaires living
here are, officially, virtually paupers.
How so? Simple: they are allowed to state their own earnings for tax
purposes, figures which are rarely challenged. And rich Greeks take
full advantage.
Astonishingly, only 5,000 people in a country of 12 million admit to
earning more than £90,000 a year — a salary that would not be enough
to buy a garden shed in Kifissia.
Yet studies have shown that more than 60,000 Greek homes each have
investments worth more than £1m, let alone unknown quantities in overseas
banks, prompting one economist to describe Greece as a ‘poor country
full of rich people’.
Manipulating a corrupt tax system, many of the residents simply say
that they earn below the basic tax threshold of around £10,000 a year,
even though they own boats, second homes on Greek islands and properties
overseas.
And, should the taxman rumble this common ruse, it can be dealt with
using a ‘fakelaki’ — an envelope stuffed with cash. There is even
a semi-official rate for bribes: passing a false tax return requires a
payment of up to 10,000 euros (the average Greek family is reckoned to
pay out £2,000 a year in fakelaki.)
Even more incredibly, Greek shipping magnates — the king of kings
among the wealthy of Kifissia — are automatically exempt from tax,
supposedly on account of the great benefits they bring the country.
Yet the shipyards are empty; once employing 15,000, they now have less
than 500 to service the once-mighty Greek shipping lines which, like
the rest of the country, are in terminal decline.
With Greek President George Papandreou calling for a crackdown on
these tax dodgers — who are believed to cost the economy as much as
£40bn a year — he is now resorting to bizarre means to identify the
cheats. After issuing warnings last year, government officials say he is
set to deploy helicopter snoopers, along with scrutiny of Google Earth
satellite pictures, to show who has a swimming pool in the northern
suburbs — an indicator, officials say, of the owner’s wealth.
Officially, just over 300 Kifissia residents admitted to having a
pool. The true figure is believed to be 20,000. There is even a boom in
sales of tarpaulins to cover pools and make them invisible to the aerial
tax inspectors.
‘The most popular and effective measure used by owners is to camouflage
their pool with a khaki military mesh to make it look like natural
undergrowth,’ says Vasilis Logothetis, director of a major swimming
pool construction company. ‘That way, neither helicopters nor Google
Earth can spot them.’
But faced with the threat of a crackdown, money is now pouring out of
the country into overseas tax havens such as Liechtenstein, the Bahamas
and Cyprus.
‘Other popular alternatives include setting up offshore companies in
Cyprus or the British Virgin Islands, or the purchase of real estate
abroad,’ says one doctor, who declares an income of less than £90,000
yet earns five times that amount.
There has also been a boom in London property purchases by Athens-based
Greeks in an attempt to hide their true worth from their domestic tax
authorities.
‘These anti-tax evasion measures by the government force us to resort
to even more detailed tax evasion ploys,’ admits Petros Iliopoulos,
a civil engineer.
Hotlines have been set up offering rewards for people who inform on tax
dodgers. Last month, to show the government is serious, it named and
shamed 68 high-earning doctors found guilty of tax evasion.
‘We will spare no effort to collect what is due to the state,’ said
Evangelos Venizelos, the new Greek finance minister of the socialist
ruling party. ‘We promise to draft and apply a new and honest tax
system, one that has been needed for decades, so that taxes are duly
paid by those who should pay.’
Yet, already, it is too late. Greece is effectively bust — relying on
EU cash from richer northern European countries, but this has been the
case ever since the country finally joined the euro in 2001.
Two years earlier, the country was barred from entering because it did
not meet the financial criteria.
No matter: the Greeks simply cooked the books. Two years later, having
falsely claimed to have met standards relating to manufacturing and
industrial production and low inflation, the Greeks were allowed in.
Funds poured into the country from across Europe and the Greeks started
spending like there was no tomorrow.
Money flowed into all areas of public life. As a result, for example, the
Greek school system is now an over-staffed shambles, employing four times
more teachers per pupil than Finland, the country with the highest-rated
education system in Europe. ‘But we still have to pay for tutors for
our two children,’ says Helena, an Athens mother. ‘The teachers are
hopeless — they seem to spend their time off sick.’
Although Brussels has now agreed to provide the next stage of its debt
payment programme to safeguard the count ry’s immediate economic
future, the Greek media still carries ominous warnings that the military
may be forced to step in should the country’s foray into Europe end
in ignominy, bankruptcy and rising violence.
For now, the crisis has simply been delayed. With European taxpayers
facing the prospect of saving Greece from bankruptcy for the second
year in a row, some say even the £100bn on offer will pay off only the
interest on the country’s debts — meaning it will be broke again
within two years.
Meanwhile, there are doom-laden warnings that the collapse of the Greek
economy could be the catalyst for another global recession.
Perhaps if the Greeks themselves had shown more willingness to tighten
their belts and pay taxes due to the state, voters across Europe might
not now be feeling such anger towards them.
But having strolled the streets of Kifissia, and watched the Greek hordes
stream past the honesty boxes on the underground, it does not take a
degree in European economics to know when somebody is taking advantage
— at our expense.