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The Almighty Buck Businesses

Greeks Set To Face Heavy Fines If They Don't Spend 30% of Their Income Electronically (smh.com.au) 187

Posted by msmash from the stranger-things dept.
Greeks will be hit with a hefty fine if they do not spend almost a third of their income electronically in an unprecedented bid by the new government to stamp out rampant tax evasion. From a report: The government expects to raise more than $808 million every year from the initiative that will force Greeks to spend 30 per cent of their income electronically, Alex Patelis, the prime minister's chief economic adviser, revealed. Individuals that fail to meet the target will be hit with a 22 per cent fine on the shortfall. Therefore, if an individual spends just 20 per cent of their income through electronic means, they would face a 22 per cent tax on the remaining 10 per cent bar some exclusions. The scheme is a radical attempt to cast some light on Greece's huge shadow economy, the world's largest, and is part of new prime minister Kyriakos Mitsotakis's sweeping overhaul to revive growth.
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Greeks Set To Face Heavy Fines If They Don't Spend 30% of Their Income Electronically More

Greeks Set To Face Heavy Fines If They Don't Spend 30% of Their Income Electronically

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  • Seems like this drives under-reporting income (Score:5, Interesting)

    by SuperKendall ( 25149 ) on Tuesday December 10, 2019 @01:58PM (#59505250)

    If you make it super expensive to ave income, more and more people will start refusing to tell you just how much they made or mis-represent it somehow.

    Also what if you are someone who simply saves a lot and doesn't want to spend much in any given year? How are you supposed to save up for something expensive like a car or a house under this system when you are forced to spend a large percentage of your income every year?

    • Re: (Score:2)

      by Shark ( 78448 )

      Wait a minute! Are you trying to suggest that some people actually wait to have money before they spend it?
      What next? Currency backed by tangible assets? Banks lending money they actually own?

    • Re: (Score:2)

      by atisss ( 1661313 )

      My first thought, that is basically chicken and egg problem.
      It seems they want to start with forcing businesses to accept bank cards, and thus declare income, as there are probably more people receiving some legal income, than businesses operating legally.
      Theoretically more and more businesses would be forced to have card readers, thus increasing their legal income, and forcing to pay more in legal salaries.

    • Re:Seems like this drives under-reporting income (Score:5, Interesting)

      by TimothyHollins ( 4720957 ) on Tuesday December 10, 2019 @02:29PM (#59505354)

      If you make it super expensive to ave income, more and more people will start refusing to tell you just how much they made or mis-represent it somehow.

      I get the feeling you have never been to Greece or even spoken to a Greek. Can you even place it on a map? They are already number 1 when it comes to tax evasion, and they already misrepresent their income as much as they think they can get away with. If you go buy anything expensive in a store the cashier will ask you straight up if you want to pay tax or not on the purchase, that's the level of obligation they feel towards doing their part in Greek society (which is understandable for many reasons).

      The idea is quite radical, but might well be necessary since the Greek economy has been tanking for a long time (mostly due to 0 faith in the bureaucratic processes from longstanding corruption and nepotism). This was not because of the EU loans but started well before that. Because of this reticence towards their own government, they also tend to save money on their own (quite literally putting it in the mattress in some cases) which further fuels the shadow economy. While there have been some minute steps towards removing corruption within the government, the problem still remains. Unless Mitsokakis can make some serious headway on combating the corruption, this effort will likely not end the way he hopes.

      • As someone who has lived in Greece, I can say for a fact that the Greeks have been world class tax evaders since at least the time I lived there, in 1985, and most likely a LONG time before that. Don't forget, Greece was pretty much an occupied country for the last ~2,000 years, up until the Kingdom of Greece was founded in 1832, and then they were a monarchy until 1924.

        The Greeks have always considered tax evasion a sort of patriotic duty. Some examples:

        When I lived there, nothing was done on credit, including home-building. Greeks would typically save enough to build a foundation in one year, roofs came next year, and walls the year after that. So the Greek government made a law saying unfinished buildings would be taxed at a lower rate. From that point forward, no Greek ever finished a building. It looked like a bombed out war zone, with half finished, wall-less buildings everywhere.

        To encourage local industry, electronic components were taxed at a lower rate than finished electronic goods. So the Greeks would import, for example, televisions. Before the ship got to a Greek harbor, workers would disassemble the TVs. They'd pay the lower tax, then re-assemble them.

        From what I saw, the Greeks seem to be natural anarchists who view all government with a large dose of suspicion. More power to them.

        • Re:Seems like this drives under-reporting income (Score:5, Insightful)

          by kenh ( 9056 ) on Tuesday December 10, 2019 @03:47PM (#59505652) Homepage Journal

          Their behavior will not support the pensions they feel entitled to, their economy will implode and it will be their fault.

          • Re: (Score:3)

            by spun ( 1352 )

            The thing is, they are quite used to their economy being a farce, and doing most everything under the table.

          • The Greek don't have pensions, they have savings stowed away. You seem to be missing the point here, this is not some new practice that a single generation is going to screw themselves using. This is literally how the country has been operating for its entire modern age.

          • Their economy has already imploded.

        • Joining the EU single currency was a mistake for Greece. Now they have German banks lending their people money, so they can import German goods. With no way to fix that trade imbalance through a floating exchange rate.

    • Money kept into a bank should be exempt from this. If you keep 100% of your income in the greek bank account where it was deposited, it's pretty obvious you didn't avoid any tax.
      Payments by credit and debit cards are fine too, obviously.

      What should be measured instead is the amount of money which is withdrawn from ATMs. That's where the government loose track.
      Every euro withdrawn from an ATM COULD be used in the underground economy.

      And then there is all the money which is sent internationally. I doubt the g

      • Re: (Score:2)

        by kenh ( 9056 )

        . I doubt the greek governement can monitor money sent abroad, even electronically.

        You are naive.

        • I'm sure they could trace back that money with the appropriate mandate in many countries. However, they can't do it on a large scale (for every of their citizens).

      • Don't give them any ideas! Next thing you know, they'll pull a pre-emptive 22% tax on every withdrawal of cash, so that it can be "covered" up front, and you have to file receipts at the end of the year to claim back any taxes you ended up paying with that cash in the first place!

      • Re: (Score:2)

        by N1AK ( 864906 )

        If you keep 100% of your income in the greek bank account where it was deposited, it's pretty obvious you didn't avoid any tax.

        That isn't correct; even if you didn't spend your income you spent something (people living in the wilderness eating berries aside); just because you didn't spend "your income" doesn't mean you didn't spend something else (savings, last years income etc).

    • Re: (Score:2)

      by AvitarX ( 172628 )

      You buy CDs with it, or stocks or bonds, depending on your time-frame.

    • It seems to me if they know how much income you have, they should just have an income tax.

      • Re: (Score:2)

        by kenh ( 9056 )

        Why do you assume they don't have an income tax? I assume they are missing out on VAT tax revenue, and income taxes on cash income.

      • It seems to me if they know how much income you have, they should just have an income tax.

        For many people, they don't know their income. That is the problem.

        If you have a job in the formal economy, and receive your paycheck by bank deposit, they know your income.

        If you then withdraw your earned money as cash, and use cash to shop, eat at restaurants, and pay a guy to remodel your kitchen, then the government does not know the income of the shopkeeper, waitress, or contractor.

        In Greece, the untaxed informal cash economy is about 30% of GDP. In America, it is about 5%.

    • Electronically transfer your savings to your bank.

      What Grease seems to lack is something like the IRS which will has the ability to Audit people that seem to be possibly hiding money from taxes that they owe.

      That said 30% of your income isn't that much as normal rule of thumb As for a middle class person,
      That would go modest housing.

    • There are countries with higher tax rates that have far fewer tax cheats. The shadow economy is entrenched there and I don't think this new law wil do much to eliminate it. Note that this issue is about VAT, or the equivalent of a sales tax and not income tax. I don't know how they plan on dealing with savings, but presumably if there's a way to prove that the money paid under the table in cash went into a bank account then it could be made exempt (ie, if you save money by buying into an investment plan,

      • Re: (Score:2)

        by hjf ( 703092 )

        People don't avoid taxes when they see taxes at work: if you pay high tax, but you get free healthcare, free education, nice roads and other infrastructure, it's one thing. Do you have such things in Greece in return for your taxes? Honest question. I'm from Argentina, and we don't. We have free healthcare but people who work have their separate health insurance and basically can't use the public health system, for example. Roads are destroyed everywhere, (most important roads are toll anyways), and power g

        • Your premise is wrong. Probably about half the people will avoid any taxes they feel certain they can get away with avoiding, regardless of benefits. They'll argue "everybody does it" as an excuse to be selfish and shift the burden onto those honest enough to pay.

        • Re: (Score:2)

          by kenh ( 9056 )

          People don't avoid paying taxes if they are seen as reasonable.

          France tried to institute a millionaire tax of 75% in 2012, they lost a lot of millionaires, though the high tax rate was defeated.

          • Re: (Score:2)

            by N1AK ( 864906 )
            And reasonable is as meaningful as "fair" when it comes to statements like this because it differs from person to person and is conveniently vague. Plenty of people in the UK feel strongly that inheritance tax is unfair, but virtually none of those people know what they'd like to tax or what service they'd like to cut to make up for the £5 billion raised if it was removed; would it be fairer to just up income tax across the board?

            I've never seen evidence that tax evasion correlates with how happy t

    • Yep, agreed. It seems there arw two kinds of people in the world - those who can have a rational thought, and those who get elected.

    • Now we may never know the answer to that ancient riddle:

      "What's a Greek urn?"

    • more and more people will start refusing to tell you just how much they made

      I'm sure that will work in their favour when the tax department looks at their reported income vs what their employer paid them. Not sure what country you live in, but every country I've ever worked in (which is multiple) the tax department knew my income, they didn't ask for it. The bigger problem is tracking self employed people but even then tax departments are often quick to figure out people mis-report.

      Also what if you are someone who simply saves a lot and doesn't want to spend much in any given year? How are you supposed to save up for something expensive like a car or a house under this system when you are forced to spend a large percentage of your income every year?

      Again I'm not sure what fantasy world you live in but we have a word for those who are able to save o

    • It's a pretty bizarre solution, tbh.

      Obviously the logic is that if the money is spent electronically, the government can track it. But requiring that everyone spends a specific percentage electronically is really weird nad probably bad, and not just for the reasons you state.

      Instead what I've seen done in the Czech Republic, where you could sometimes avoid the VAT by telling the vendor you "don't need the receipt".and they'd use another set of books. The solution wasn't forcing people to buy with credit car

    • Isn't it basically cash withdrawal tax? That should work regardless of how shadow economy operates by simply removing bunch of cash from circulation. How are you going to pay your workers wages in cash and without taxes if your shop gets it's revenue through card payments? You can't, you simply no longer have enough cash to do that. Which forces more people to get their wages through banks, which leads them to spend less cash, which removes even more cash from circulation - positive feedback.

  • I like how we fight tooth an nail (Score:4, Informative)

    by rsilvergun ( 571051 ) on Tuesday December 10, 2019 @02:10PM (#59505292)
    to get workers to pay every penny of tax, but ignore the billions from the top. Good show old bean.

    • Re: (Score:2)

      by kenh ( 9056 )

      Right, the rich pay no taxes in Greece, you know, the 30% rule applies to the rich too.

      Curious what you actually pay in income taxes - not the dollar amount, the percentage.

      Take your actualtaxes paid, after exemptions and deductions (loopholes) and divide it by your total income, and multiply it times 100 - I bet it's below 7%.

      Remind me how folks paying 15 or 25% of their income aren't paying their fair share...

      • People have no idea how taxation works, it's bizarre. Talking only Federal taxes, they think they pay e.g. 25% because they fall into the 25% bracket, but if you look at their tax returns they will end up having paid yeah, like 7-10%. They then complain that the "fat cats" are paying less in taxes when the numbers don't back that up.

        I agree we are going to need to pay more taxes, and I agree capital gains and the higher marginal rates should go up (by a reasonable %, not to 90% as the commies would have it)

        • in taxes and get basically nothing for it.

          You don't seem to understand how taxes work. Most taxes are regressive [investopedia.com]. Good examples include flat rate taxes like the per bottle liqueur tax. You pay the same tax on two buck chuck that a billionaire pays on his $2000 bottle of whatever. Then there's Sales and VAT taxes that disproportionately impact people who spend all their money on living and stuff (60-80% of Americans live paycheck to paycheck, depending on if you think $1000 in the bank qualifies as "savi

      • Re: (Score:2)

        by radl33t ( 900691 )
        Is this a Greece formula or did we switch to the US? In the US, FICA is 7.65% by itself up to ~130K. I was paying over 10% income tax on a graduate stipend of 22K for years. Now I pay just shy of 30% (17% FED + 6% STATE + 6% FICA)

    • to get workers to pay every penny of tax, but ignore the billions from the top. Good show old bean.

      You don't seem to understand Greece. There are very few "billions from the top". They don't have Apple or Facebook level tax evasion. It is a country where those mega companies would literally be amateurs in the face of the abilities of the common man.

      • they exist. They're working hard to make the poor pay while protecting themselves.

        Greece is a poor country, but it's also rife with corruption. There's still plenty at the top. They've got their 1% just like America, China and North Korea. No more ruling class.

    • The Fight (Score:5, Informative)

      by JBMcB ( 73720 ) on Tuesday December 10, 2019 @04:46PM (#59505866)

      According to my friend, who is from Greece, the fight is to get workers to pay *any* tax. Go into pretty much any store or service location in Greece and you get two prices, one for cash and one for credit. Cash is lower, as it's *never* reported as taxable income.

      Multiply this by millions of people over hundreds of transactions per year, and that's why Greece can't pay it's bills.

      As for the rich - they moved their money out of the country when the debt crisis first hit, and the government nearly doubled the tax rate on the highest brackets. They could have been making 40% on $80 billion euro, instead they cranked up the rate and are now making 80% on nothing.

      • we always just let them have everything. They're still in the country by the sound of it. They were born, raised and made their fortunes there. They continue to make fortunes there off the backs of working people. There is zero reason to let them keep everything besides the fact that we were told when we were children that that would be stealing. None of these people earned it. They didn't build or make anything. They're the aristocracy. We don't need them, they're parasites.

        If the rich aren't going to p

        • Re: (Score:3, Insightful)

          by Sander1685 ( 6195654 )
          The scary stuff about people talking like this is that "the rich" means "everyone having more than me". The problem is that "taking stuff from the rich" and saying "calling it stealing is just a social construct" is that it creates a dangerous precedent. Who gets to decide who "has too much"? I enjoy birthday conversations with armchair communists. I make more than average in my country, and I gladly pay a lot of tax. But what most "armchair communists" fail to realize is that they ARE the 1%. So I tel

  • Re: (Score:2, Interesting)

    by account_deleted ( 4530225 )
    Comment removed based on user account deletion

    • Re:This is going to backfire. (Score:4, Interesting)

      by fish_in_the_c ( 577259 ) on Tuesday December 10, 2019 @02:23PM (#59505332)

      This is nearly bad enough to encourage a return to the barter system. Try to figure out income then.

      • They are already using the barter system. Perhaps what you mean is substituting something else for the "holy grease" such as using sea-shells rather than cash ...

    • Re:This is going to backfire. (Score:4, Insightful)

      by thegarbz ( 1787294 ) on Tuesday December 10, 2019 @04:36PM (#59505840)

      They seem to have inadvertently incentivized further tax evasion, and hiding of income.

      You've never been to Greece clearly. There is no "further" tax evasion. The country even before the introduction of these rules has always been the absolute masters of evading paying every tiniest penny. If there was "further" tax evasion to be had they'd be evading it already regardless of the policy.

      Don't let the government know that you're making money.

      That's great if you're making money yourself. Otherwise you need to sure the person giving you money is in on it.

      These transaction systems represent parasites that feed off of other people's private business.

      I'm sorry but this is absolute garbage. Electronic payment systems are of such benefit to "private businesses" that those businesses actively attempt to move to an all electronic system. No staff handling cash, less theft (internal and external), no balancing the till daily, no float management, no trips to the bank, god forbid you get an audit one day as well. My local small grocer went card only precisely because by paying for this service they netted additional profit by getting rid of the rigmarole involved with allowing cash transactions. Many stores are doing the same for this reason.

      The fact you think service providers that offer you a way of simplifying your business are "parasites" just shows everyone that you have never worked in any financial capacity for any company, much less have a clue about running a business.

      • Re: (Score:2)

        by dryeo ( 100693 )

        In N. America, the banks and credit card companies are parasites to a large degree. If I pay by debit too often, I pay an extra fee. If the store accepts credit, that extra 3% is spread over all customers, as well as slowing things down. The odd time a store will have their payment processor down on one cashier lane,so cash only, does that line move.
        The big reason of course is to get people to spend money they don't have. If you pay cash, you have to have the cash to pay. It is also much easier to budget ca

  • Wow, Greece has gone insane.

    • Wow, Greece has gone insane.

      Yes it has, sometime in the early 1900s. This is just an attempt to bring it back to sanity like the rest of the world.

  • Completely debase their currency to try to stamp out the grey economy.

  • New business plan (Score:3, Informative)

    by smoot123 ( 1027084 ) on Tuesday December 10, 2019 @04:13PM (#59505744)

    Install ATMs which electronically "sell" cash (for a nominal service charge).

    Damn, it's been more than 10 minutes. I'm sure someone beat me to it.

    • That's not the point. Card transactions are usually not under bank privacy laws, so they can be used by the government to check how much you spend, Even if it's at an ATM.
  • They'd make far more money more easily if they went after the Greek shipping industry & made them pay the taxes they're evading. It makes more sense to investigate a handful of corporations than chase around 10 million citizens, many of whom are struggling to make ends meet & won't be able to pay the fines.

  • Cash = privacy (Score:3)

    by p51d007 ( 656414 ) on Tuesday December 10, 2019 @05:20PM (#59505968)
    Once the government(s) get 100% control over cash, by making it electronic, 100% of (non) healthcare, then they can control people completely. Try to buy something and it is refused because your health report says you are over weight, high blood pressure, where you live etc...

  • but this is individuals trying to line their pockets, somehow.

    i have no idea how, but i am certain this is the case.

    the government *already* knows who is evading paying income tax.

    my mother worked for 30+ years for the greek equivalent of the IRS. She would routinely see a reported â1000 *yearly* income in a family with a stay-at-home mom and two kids at school

  • Because of course everyone will report their income correctly, and no-one will do jobs cash-in-hand to bypass the banks.

    You think there's rampant tax evasion now? Wait until 90% of the populace stops paying income tax because of the nosy government. I'm sure it'll drag the Euro through the mud too, and i wouldn't be surprised if you see massive devaluations of it, caused by this.

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