If you can dodge taxes, you can dodge a ball

This article is from the Soapbox on MoneyWeb yesterday.  HA commentaries in-paragraph, outside grey boxes and not italicised. 

The taxman as lesser of two evils

When tax dodging becomes a way of life.

27 May 2010 19:17. 
*This article first appeared in the GIBS Review: Issue 9, 2010

One of the core issues at the heart of the Greek financial crisis is the enormous reluctance of Greeks to pay tax, writes Forbes. It’s been estimated that the so-called shadow or black economy in Greece represents at least 30% of gross domestic product. It predicts that because cutting public services is going to be deeply unpopular and the political backlash severe, ‘collecting tax is going to look like a much more attractive option to all politicians,’ including in the US and Britain.

Any thinking person would note that the problem here does not lie with Greek citizens evading taxes, but rather with the Greek government believing it can spend as much money as it wants, on whatever projects it chooses, in the process becoming the biggest employer in Greece and bankrupting itself.  The fact that Greeks are paying $1,700/oz for physical gold means their wealth will be protracted even with a government bankruptcy.

The problem is aggravated by the fact that there is ‘a lack of transparency and culture of favours which has caused corruption to run rampant and public funds to be squandered, leaving Greece with a dangerous addiction to debt’, reports AFP-Sapa in Business Report. It quotes University of Athens economics professor George Pagoulatos, who says that waste and corruption could be partly explained by the fact that there is a tolerance for it within Greek society. The whole social pyramid, from the lowest earners to the wealthy and the politically powerful, “takes advantage of and tolerates corruption and tax evasion…For the former it’s a way of getting by and for the latter a way to get rich,” he says.

Evading taxes is not what makes one rich, paying taxes and having a government is what makes one poor.  A different perspective is needed.  Working and being productive is what makes one rich and wealthy, giving income to the government makes one poorer. 

Furthermore, doing away with government does away with corruption.  Problem solved.

The New York Times points to the ‘staggering breadth of tax dodging that has long been a way of life’ in Greece. ‘In the wealthy, northern suburbs of Athens just 324 residents checked the box on their tax returns admitting that they owned pools. So tax investigators studied satellite photos of the area … and came back with a decidedly different number: 16 974 pools.

In South Africa, Finance Minister Pravin Gordhan said that the country “must intensify efforts to root out the culture of easy money”, in his Budget vote. He announced a range of steps to improve tax compliance, including further clampdowns on tax haven usage, and that from September Sars would require anyone, including those below the tax threshold, receiving ‘any form of employment income’ to be registered with Sars ‘to help reduce the scope for non-compliance”.

Gordhan wants to root out the culture of “easy money”?  What’s easier: 1) working and earning a living, or 2) taking the earnings of others, calling it taxes, and making tax evasion a crime?

A little like being the school bully, stealing other kids’ lunches, but getting the teachers on your side, isn’t it?


Comments are closed.