Monday, June 18, 2012

18/6/2012: Told ya so... Greek tax collection slumps during elections

Yesterday, I commented that during the elections, Greeks have stopped pushing through austerity measures so as not to aggravate the electorate. When challenged to explain what I meant I said that during the elections, Governments pay their debts to businesses on time, pay suppliers on time, stop enforcement actions on taxes due and stop tax reforms. Here it the confirmation that this has happened: link. Note Novotny saying that Greek tax collection is virtually halted during elections and will now be restarted and recent austerity measures are said to add hundreds (if not thousands) of unexpected euros to tax bills.

Update 25/6/2012: this just in - Greece exceeded targets for hiring civil servants and effectively suspended structural adjustments for two months during elections (link). 


Jeriakis said...

It seems to be normal in Greece for anything negative to be suspended during a pre-election period. This has been a problem since the beginning of May
Even with a pro-bailout government, Greece will leave or be forced out of the Eurozone for failing to deliver on the terms of the memorandum. GDP targets are behind, revenue from taxation and stamping out corruption below target and the privatisation programme has virtually stopped in the run up to the election. Greek politicians haven't the discipline to deliver - Grexit inevitable

Jeriakis said...

As I have already pointed out, Greek politicians haven't got the discipline to implement the terms of the memorandum document. There are agreed milestones with delivery dates in the memorandum and the Greek government will see how far it can get without pushing through reforms. There will probably be another 'fudge' when the Troika visits the next time - worsened economic conditions etc. However, this should not prevent the reforms of closed professions, the tax collection system or tackling graft and corruption. It remains to be seen whether any progress is made in these areas, as agreed in the memorandum, and if not what the Troika will do about it.